Correlation Between Korea Refractories and Top Material
Can any of the company-specific risk be diversified away by investing in both Korea Refractories and Top Material at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Korea Refractories and Top Material into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Refractories Co and Top Material Co, you can compare the effects of market volatilities on Korea Refractories and Top Material and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Korea Refractories with a short position of Top Material. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Refractories and Top Material.
Diversification Opportunities for Korea Refractories and Top Material
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Korea and Top is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Korea Refractories Co and Top Material Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top Material and Korea Refractories is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Korea Refractories Co are associated (or correlated) with Top Material. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Top Material has no effect on the direction of Korea Refractories i.e., Korea Refractories and Top Material go up and down completely randomly.
Pair Corralation between Korea Refractories and Top Material
Assuming the 90 days trading horizon Korea Refractories Co is expected to generate 0.48 times more return on investment than Top Material. However, Korea Refractories Co is 2.07 times less risky than Top Material. It trades about -0.14 of its potential returns per unit of risk. Top Material Co is currently generating about -0.2 per unit of risk. If you would invest 232,500 in Korea Refractories Co on August 29, 2024 and sell it today you would lose (19,000) from holding Korea Refractories Co or give up 8.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.5% |
| Values | Daily Returns |
Korea Refractories Co vs. Top Material Co
Performance |
| Timeline |
| Korea Refractories |
| Top Material |
Korea Refractories and Top Material Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Refractories and Top Material
The main advantage of trading using opposite Korea Refractories and Top Material positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Refractories position performs unexpectedly, Top Material can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Top Material will offset losses from the drop in Top Material's long position.| Korea Refractories vs. Hanmi Semiconductor Co | Korea Refractories vs. LG Household Healthcare | Korea Refractories vs. QUALITAS SEMICONDUCTOR LTD | Korea Refractories vs. Hankook Furniture Co |
| Top Material vs. Korea Refract | Top Material vs. Korea Refractories Co | Top Material vs. Shinhan Inverse WTI | Top Material vs. SAMYOUNG M Tek Co |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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