Correlation Between ENERGYMACHINERY KOREA and Top Material
Can any of the company-specific risk be diversified away by investing in both ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA and Top Material into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ENERGYMACHINERY KOREA CoLtd and Top Material Co, you can compare the effects of market volatilities on ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA with a short position of Top Material. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENERGYMACHINERY KOREA and Top Material.
Diversification Opportunities for ENERGYMACHINERY KOREA and Top Material
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ENERGYMACHINERY and Top is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding ENERGYMACHINERY KOREA CoLtd and Top Material Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top Material and ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA CoLtd 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 ENERGYMACHINERY KOREA i.e., ENERGYMACHINERY KOREA and Top Material go up and down completely randomly.
Pair Corralation between ENERGYMACHINERY KOREA and Top Material
Assuming the 90 days trading horizon ENERGYMACHINERY KOREA CoLtd is expected to under-perform the Top Material. But the stock apears to be less risky and, when comparing its historical volatility, ENERGYMACHINERY KOREA CoLtd is 1.62 times less risky than Top Material. The stock trades about -0.02 of its potential returns per unit of risk. The Top Material Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,938,434 in Top Material Co on August 29, 2024 and sell it today you would lose (848,434) from holding Top Material Co or give up 21.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ENERGYMACHINERY KOREA CoLtd vs. Top Material Co
Performance |
| Timeline |
| ENERGYMACHINERY KOREA |
| Top Material |
ENERGYMACHINERY KOREA and Top Material Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENERGYMACHINERY KOREA and Top Material
The main advantage of trading using opposite ENERGYMACHINERY KOREA and Top Material positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENERGYMACHINERY KOREA 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.| ENERGYMACHINERY KOREA vs. Samsung Electronics Co | ENERGYMACHINERY KOREA vs. Samsung Electronics Co | ENERGYMACHINERY KOREA vs. Hyundai Motor Co | ENERGYMACHINERY KOREA vs. Hyundai Motor |
| Top Material vs. Samsung Electronics Co | Top Material vs. Samsung Electronics Co | Top Material vs. LG Energy Solution | Top Material vs. SK Hynix |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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