Correlation Between TK Chemical and Seah Steel
Can any of the company-specific risk be diversified away by investing in both TK Chemical and Seah Steel 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 TK Chemical and Seah Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TK Chemical and Seah Steel Corp, you can compare the effects of market volatilities on TK Chemical and Seah Steel 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 TK Chemical with a short position of Seah Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of TK Chemical and Seah Steel.
Diversification Opportunities for TK Chemical and Seah Steel
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 104480 and Seah is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding TK Chemical and Seah Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seah Steel Corp and TK Chemical 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 TK Chemical are associated (or correlated) with Seah Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seah Steel Corp has no effect on the direction of TK Chemical i.e., TK Chemical and Seah Steel go up and down completely randomly.
Pair Corralation between TK Chemical and Seah Steel
Assuming the 90 days trading horizon TK Chemical is expected to under-perform the Seah Steel. But the stock apears to be less risky and, when comparing its historical volatility, TK Chemical is 1.16 times less risky than Seah Steel. The stock trades about -0.07 of its potential returns per unit of risk. The Seah Steel Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 15,039,500 in Seah Steel Corp on August 29, 2024 and sell it today you would earn a total of 2,260,500 from holding Seah Steel Corp or generate 15.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TK Chemical vs. Seah Steel Corp
Performance |
| Timeline |
| TK Chemical |
| Seah Steel Corp |
TK Chemical and Seah Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TK Chemical and Seah Steel
The main advantage of trading using opposite TK Chemical and Seah Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TK Chemical position performs unexpectedly, Seah Steel 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 Seah Steel will offset losses from the drop in Seah Steel's long position.| TK Chemical vs. Dongwon Metal Co | TK Chemical vs. Daiyang Metal Co | TK Chemical vs. Guyoung Technology Co | TK Chemical vs. iNtRON Biotechnology |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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