Correlation Between Total Soft and Cafe24 Corp

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Can any of the company-specific risk be diversified away by investing in both Total Soft and Cafe24 Corp 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 Total Soft and Cafe24 Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Total Soft Bank and Cafe24 Corp, you can compare the effects of market volatilities on Total Soft and Cafe24 Corp 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 Total Soft with a short position of Cafe24 Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Soft and Cafe24 Corp.

Diversification Opportunities for Total Soft and Cafe24 Corp

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between Total and Cafe24 is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Total Soft Bank and Cafe24 Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cafe24 Corp and Total Soft 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 Total Soft Bank are associated (or correlated) with Cafe24 Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cafe24 Corp has no effect on the direction of Total Soft i.e., Total Soft and Cafe24 Corp go up and down completely randomly.

Pair Corralation between Total Soft and Cafe24 Corp

Assuming the 90 days trading horizon Total Soft Bank is expected to under-perform the Cafe24 Corp. In addition to that, Total Soft is 1.48 times more volatile than Cafe24 Corp. It trades about -0.01 of its total potential returns per unit of risk. Cafe24 Corp is currently generating about 0.25 per unit of volatility. If you would invest  2,465,000  in Cafe24 Corp on August 29, 2024 and sell it today you would earn a total of  695,000  from holding Cafe24 Corp or generate 28.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Total Soft Bank  vs.  Cafe24 Corp

 Performance 
       Timeline  
Total Soft Bank 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Total Soft Bank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Total Soft is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Cafe24 Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Cafe24 Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cafe24 Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Total Soft and Cafe24 Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Total Soft and Cafe24 Corp

The main advantage of trading using opposite Total Soft and Cafe24 Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Total Soft position performs unexpectedly, Cafe24 Corp 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 Cafe24 Corp will offset losses from the drop in Cafe24 Corp's long position.
The idea behind Total Soft Bank and Cafe24 Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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