Correlation Between TK Chemical and Daou Technology
Can any of the company-specific risk be diversified away by investing in both TK Chemical and Daou Technology 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 Daou Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TK Chemical and Daou Technology, you can compare the effects of market volatilities on TK Chemical and Daou Technology 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 Daou Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of TK Chemical and Daou Technology.
Diversification Opportunities for TK Chemical and Daou Technology
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 104480 and Daou is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding TK Chemical and Daou Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daou Technology 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 Daou Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daou Technology has no effect on the direction of TK Chemical i.e., TK Chemical and Daou Technology go up and down completely randomly.
Pair Corralation between TK Chemical and Daou Technology
Assuming the 90 days trading horizon TK Chemical is expected to under-perform the Daou Technology. In addition to that, TK Chemical is 2.11 times more volatile than Daou Technology. It trades about -0.08 of its total potential returns per unit of risk. Daou Technology is currently generating about 0.03 per unit of volatility. If you would invest 1,836,000 in Daou Technology on August 30, 2024 and sell it today you would earn a total of 9,000 from holding Daou Technology or generate 0.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TK Chemical vs. Daou Technology
Performance |
| Timeline |
| TK Chemical |
| Daou Technology |
TK Chemical and Daou Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TK Chemical and Daou Technology
The main advantage of trading using opposite TK Chemical and Daou Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TK Chemical position performs unexpectedly, Daou Technology 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 Daou Technology will offset losses from the drop in Daou Technology's long position.| TK Chemical vs. KMH Hitech Co | TK Chemical vs. GemVaxKAEL CoLtd | TK Chemical vs. Busan Industrial Co | TK Chemical vs. Busan Ind |
| Daou Technology vs. AptaBio Therapeutics | Daou Technology vs. Daewoo SBI SPAC | Daou Technology vs. Dream Security co | Daou Technology vs. Microfriend |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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