Correlation Between Miwon Chemical and Top Material
Can any of the company-specific risk be diversified away by investing in both Miwon Chemical and Top Material 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 Miwon Chemical and Top Material into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Miwon Chemical and Top Material Co, you can compare the effects of market volatilities on Miwon Chemical and Top Material 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 Miwon Chemical with a short position of Top Material. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miwon Chemical and Top Material.
Diversification Opportunities for Miwon Chemical and Top Material
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Miwon and Top is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Miwon Chemical and Top Material Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top Material and Miwon 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 Miwon Chemical are associated (or correlated) with Top Material. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Top Material has no effect on the direction of Miwon Chemical i.e., Miwon Chemical and Top Material go up and down completely randomly.
Pair Corralation between Miwon Chemical and Top Material
Assuming the 90 days trading horizon Miwon Chemical is expected to under-perform the Top Material. But the stock apears to be less risky and, when comparing its historical volatility, Miwon Chemical is 7.26 times less risky than Top Material. The stock trades about -0.03 of its potential returns per unit of risk. The Top Material Co is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 2,660,000 in Top Material Co on November 27, 2024 and sell it today you would earn a total of 915,000 from holding Top Material Co or generate 34.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Miwon Chemical vs. Top Material Co
Performance |
| Timeline |
| Miwon Chemical |
| Top Material |
Miwon Chemical and Top Material Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Miwon Chemical and Top Material
The main advantage of trading using opposite Miwon Chemical and Top Material positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miwon Chemical position performs unexpectedly, Top Material 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 Top Material will offset losses from the drop in Top Material's long position.| Miwon Chemical vs. LG Chem | Miwon Chemical vs. Chunbo Co | Miwon Chemical vs. DukSan Neolux CoLtd | Miwon Chemical vs. Hyosung Chemical Corp |
| Top Material vs. Youngsin Metal Industrial | Top Material vs. Kukil Metal Co | Top Material vs. PJ Metal Co | Top Material vs. Formetal 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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