Correlation Between TK Chemical and Namhae Chemical
Can any of the company-specific risk be diversified away by investing in both TK Chemical and Namhae Chemical 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 Namhae Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TK Chemical and Namhae Chemical, you can compare the effects of market volatilities on TK Chemical and Namhae Chemical 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 Namhae Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of TK Chemical and Namhae Chemical.
Diversification Opportunities for TK Chemical and Namhae Chemical
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between 104480 and Namhae is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding TK Chemical and Namhae Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhae Chemical 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 Namhae Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhae Chemical has no effect on the direction of TK Chemical i.e., TK Chemical and Namhae Chemical go up and down completely randomly.
Pair Corralation between TK Chemical and Namhae Chemical
Assuming the 90 days trading horizon TK Chemical is expected to generate 2.57 times more return on investment than Namhae Chemical. However, TK Chemical is 2.57 times more volatile than Namhae Chemical. It trades about 0.0 of its potential returns per unit of risk. Namhae Chemical is currently generating about -0.04 per unit of risk. If you would invest 166,800 in TK Chemical on October 25, 2024 and sell it today you would lose (12,200) from holding TK Chemical or give up 7.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TK Chemical vs. Namhae Chemical
Performance |
| Timeline |
| TK Chemical |
| Namhae Chemical |
TK Chemical and Namhae Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TK Chemical and Namhae Chemical
The main advantage of trading using opposite TK Chemical and Namhae Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TK Chemical position performs unexpectedly, Namhae Chemical 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 Namhae Chemical will offset losses from the drop in Namhae Chemical's long position.| TK Chemical vs. Samsung Electronics Co | TK Chemical vs. Samsung Electronics Co | TK Chemical vs. KB Financial Group | TK Chemical vs. Shinhan Financial Group |
| Namhae Chemical vs. Dongwoo Farm To | Namhae Chemical vs. Nam Hwa Construction | Namhae Chemical vs. JC Chemical Co | Namhae Chemical vs. SH Energy 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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