Correlation Between TK Chemical and SIMMTECH
Can any of the company-specific risk be diversified away by investing in both TK Chemical and SIMMTECH 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 SIMMTECH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TK Chemical and SIMMTECH Co, you can compare the effects of market volatilities on TK Chemical and SIMMTECH 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 SIMMTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of TK Chemical and SIMMTECH.
Diversification Opportunities for TK Chemical and SIMMTECH
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 104480 and SIMMTECH is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding TK Chemical and SIMMTECH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMMTECH 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 SIMMTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMMTECH has no effect on the direction of TK Chemical i.e., TK Chemical and SIMMTECH go up and down completely randomly.
Pair Corralation between TK Chemical and SIMMTECH
Assuming the 90 days trading horizon TK Chemical is expected to generate 0.66 times more return on investment than SIMMTECH. However, TK Chemical is 1.51 times less risky than SIMMTECH. It trades about -0.06 of its potential returns per unit of risk. SIMMTECH Co is currently generating about -0.15 per unit of risk. If you would invest 181,400 in TK Chemical on September 14, 2024 and sell it today you would lose (47,300) from holding TK Chemical or give up 26.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TK Chemical vs. SIMMTECH Co
Performance |
| Timeline |
| TK Chemical |
| SIMMTECH |
TK Chemical and SIMMTECH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TK Chemical and SIMMTECH
The main advantage of trading using opposite TK Chemical and SIMMTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TK Chemical position performs unexpectedly, SIMMTECH 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 SIMMTECH will offset losses from the drop in SIMMTECH's long position.| TK Chemical vs. Hana Financial | TK Chemical vs. Lotte Non Life Insurance | TK Chemical vs. DB Financial Investment | TK Chemical vs. Daol Investment Securities |
| SIMMTECH vs. Hana Technology Co | SIMMTECH vs. Pungguk Ethanol Industrial | SIMMTECH vs. Samsung Life Insurance | SIMMTECH vs. Dongbu Insurance Co |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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