Correlation Between Korea Electronic and TK Chemical
Can any of the company-specific risk be diversified away by investing in both Korea Electronic and TK Chemical 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 Electronic and TK Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Electronic Certification and TK Chemical, you can compare the effects of market volatilities on Korea Electronic and TK Chemical 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 Electronic with a short position of TK Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electronic and TK Chemical.
Diversification Opportunities for Korea Electronic and TK Chemical
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Korea and 104480 is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electronic Certification and TK Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TK Chemical and Korea Electronic 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 Electronic Certification are associated (or correlated) with TK Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TK Chemical has no effect on the direction of Korea Electronic i.e., Korea Electronic and TK Chemical go up and down completely randomly.
Pair Corralation between Korea Electronic and TK Chemical
Assuming the 90 days trading horizon Korea Electronic is expected to generate 3.44 times less return on investment than TK Chemical. But when comparing it to its historical volatility, Korea Electronic Certification is 4.38 times less risky than TK Chemical. It trades about 0.23 of its potential returns per unit of risk. TK Chemical is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 136,900 in TK Chemical on October 15, 2024 and sell it today you would earn a total of 29,700 from holding TK Chemical or generate 21.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Electronic Certification vs. TK Chemical
Performance |
| Timeline |
| Korea Electronic Cer |
| TK Chemical |
Korea Electronic and TK Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electronic and TK Chemical
The main advantage of trading using opposite Korea Electronic and TK Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electronic position performs unexpectedly, TK Chemical 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 TK Chemical will offset losses from the drop in TK Chemical's long position.| Korea Electronic vs. Jin Air Co | Korea Electronic vs. Hanwha Life Insurance | Korea Electronic vs. Cloud Air CoLtd | Korea Electronic vs. DB Insurance Co |
| TK Chemical vs. Kakao Games Corp | TK Chemical vs. Anam Electronics Co | TK Chemical vs. Korea Electronic Certification | TK Chemical vs. Cuckoo Electronics 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 Stocks Directory module to find actively traded stocks across global markets.
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