Correlation Between TK Chemical and Songwon Industrial
Can any of the company-specific risk be diversified away by investing in both TK Chemical and Songwon Industrial 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 Songwon Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TK Chemical and Songwon Industrial Co, you can compare the effects of market volatilities on TK Chemical and Songwon Industrial 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 Songwon Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of TK Chemical and Songwon Industrial.
Diversification Opportunities for TK Chemical and Songwon Industrial
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between 104480 and Songwon is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding TK Chemical and Songwon Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Songwon Industrial 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 Songwon Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Songwon Industrial has no effect on the direction of TK Chemical i.e., TK Chemical and Songwon Industrial go up and down completely randomly.
Pair Corralation between TK Chemical and Songwon Industrial
Assuming the 90 days trading horizon TK Chemical is expected to generate 2.74 times more return on investment than Songwon Industrial. However, TK Chemical is 2.74 times more volatile than Songwon Industrial Co. It trades about 0.18 of its potential returns per unit of risk. Songwon Industrial Co is currently generating about 0.22 per unit of risk. 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 |
TK Chemical vs. Songwon Industrial Co
Performance |
| Timeline |
| TK Chemical |
| Songwon Industrial |
TK Chemical and Songwon Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TK Chemical and Songwon Industrial
The main advantage of trading using opposite TK Chemical and Songwon Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TK Chemical position performs unexpectedly, Songwon Industrial 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 Songwon Industrial will offset losses from the drop in Songwon Industrial's long position.| TK Chemical vs. Kakao Games Corp | TK Chemical vs. Anam Electronics Co | TK Chemical vs. Korea Electronic Certification | TK Chemical vs. Cuckoo Electronics Co |
| Songwon Industrial vs. Sung Bo Chemicals | Songwon Industrial vs. Daewon Chemical Co | Songwon Industrial vs. Youngbo Chemical Co | Songwon Industrial vs. TK Chemical |
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 CEOs Directory module to screen CEOs from public companies around the world.
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