Correlation Between TK Chemical and Seoam Machinery
Can any of the company-specific risk be diversified away by investing in both TK Chemical and Seoam Machinery 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 Seoam Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TK Chemical and Seoam Machinery Industry, you can compare the effects of market volatilities on TK Chemical and Seoam Machinery 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 Seoam Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of TK Chemical and Seoam Machinery.
Diversification Opportunities for TK Chemical and Seoam Machinery
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between 104480 and Seoam is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding TK Chemical and Seoam Machinery Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoam Machinery Industry 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 Seoam Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoam Machinery Industry has no effect on the direction of TK Chemical i.e., TK Chemical and Seoam Machinery go up and down completely randomly.
Pair Corralation between TK Chemical and Seoam Machinery
Assuming the 90 days trading horizon TK Chemical is expected to under-perform the Seoam Machinery. But the stock apears to be less risky and, when comparing its historical volatility, TK Chemical is 1.09 times less risky than Seoam Machinery. The stock trades about -0.01 of its potential returns per unit of risk. The Seoam Machinery Industry is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 442,605 in Seoam Machinery Industry on October 18, 2024 and sell it today you would lose (63,105) from holding Seoam Machinery Industry or give up 14.26% 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. Seoam Machinery Industry
Performance |
| Timeline |
| TK Chemical |
| Seoam Machinery Industry |
TK Chemical and Seoam Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TK Chemical and Seoam Machinery
The main advantage of trading using opposite TK Chemical and Seoam Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TK Chemical position performs unexpectedly, Seoam Machinery 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 Seoam Machinery will offset losses from the drop in Seoam Machinery's long position.| TK Chemical vs. Korea Alcohol Industrial | TK Chemical vs. DoubleU Games Co | TK Chemical vs. ChipsMedia | TK Chemical vs. DC Media Co |
| Seoam Machinery vs. TK Chemical | Seoam Machinery vs. Global Standard Technology | Seoam Machinery vs. Kukdo Chemical Co | Seoam Machinery vs. Kukdong Oil Chemicals |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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