Correlation Between Cheryong Industrial and Taeyang Metal
Can any of the company-specific risk be diversified away by investing in both Cheryong Industrial and Taeyang Metal 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 Cheryong Industrial and Taeyang Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheryong Industrial CoLtd and Taeyang Metal Industrial, you can compare the effects of market volatilities on Cheryong Industrial and Taeyang Metal 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 Cheryong Industrial with a short position of Taeyang Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheryong Industrial and Taeyang Metal.
Diversification Opportunities for Cheryong Industrial and Taeyang Metal
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cheryong and Taeyang is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Cheryong Industrial CoLtd and Taeyang Metal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taeyang Metal Industrial and Cheryong Industrial 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 Cheryong Industrial CoLtd are associated (or correlated) with Taeyang Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taeyang Metal Industrial has no effect on the direction of Cheryong Industrial i.e., Cheryong Industrial and Taeyang Metal go up and down completely randomly.
Pair Corralation between Cheryong Industrial and Taeyang Metal
Assuming the 90 days trading horizon Cheryong Industrial CoLtd is expected to generate 1.03 times more return on investment than Taeyang Metal. However, Cheryong Industrial is 1.03 times more volatile than Taeyang Metal Industrial. It trades about -0.1 of its potential returns per unit of risk. Taeyang Metal Industrial is currently generating about -0.14 per unit of risk. If you would invest 620,000 in Cheryong Industrial CoLtd on August 27, 2024 and sell it today you would lose (49,000) from holding Cheryong Industrial CoLtd or give up 7.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheryong Industrial CoLtd vs. Taeyang Metal Industrial
Performance |
| Timeline |
| Cheryong Industrial CoLtd |
| Taeyang Metal Industrial |
Cheryong Industrial and Taeyang Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheryong Industrial and Taeyang Metal
The main advantage of trading using opposite Cheryong Industrial and Taeyang Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheryong Industrial position performs unexpectedly, Taeyang Metal 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 Taeyang Metal will offset losses from the drop in Taeyang Metal's long position.| Cheryong Industrial vs. LG Household Healthcare | Cheryong Industrial vs. SH Energy Chemical | Cheryong Industrial vs. Echomarketing CoLtd | Cheryong Industrial vs. TK Chemical |
| Taeyang Metal vs. AptaBio Therapeutics | Taeyang Metal vs. Daewoo SBI SPAC | Taeyang Metal vs. Dream Security co | Taeyang Metal 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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