Correlation Between Cheryong Industrial and RF Materials
Can any of the company-specific risk be diversified away by investing in both Cheryong Industrial and RF Materials 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 RF Materials 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 RF Materials Co, you can compare the effects of market volatilities on Cheryong Industrial and RF Materials 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 RF Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheryong Industrial and RF Materials.
Diversification Opportunities for Cheryong Industrial and RF Materials
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cheryong and 327260 is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Cheryong Industrial CoLtd and RF Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF Materials 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 RF Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF Materials has no effect on the direction of Cheryong Industrial i.e., Cheryong Industrial and RF Materials go up and down completely randomly.
Pair Corralation between Cheryong Industrial and RF Materials
Assuming the 90 days trading horizon Cheryong Industrial CoLtd is expected to generate 1.64 times more return on investment than RF Materials. However, Cheryong Industrial is 1.64 times more volatile than RF Materials Co. It trades about 0.05 of its potential returns per unit of risk. RF Materials Co is currently generating about -0.07 per unit of risk. If you would invest 351,534 in Cheryong Industrial CoLtd on September 2, 2024 and sell it today you would earn a total of 162,466 from holding Cheryong Industrial CoLtd or generate 46.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheryong Industrial CoLtd vs. RF Materials Co
Performance |
| Timeline |
| Cheryong Industrial CoLtd |
| RF Materials |
Cheryong Industrial and RF Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheryong Industrial and RF Materials
The main advantage of trading using opposite Cheryong Industrial and RF Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheryong Industrial position performs unexpectedly, RF Materials 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 RF Materials will offset losses from the drop in RF Materials' long position.| Cheryong Industrial vs. Nature and Environment | Cheryong Industrial vs. Busan Industrial Co | Cheryong Industrial vs. Busan Ind | Cheryong Industrial vs. Mirae Asset Daewoo |
| RF Materials vs. SK Hynix | RF Materials vs. LX Semicon Co | RF Materials vs. People Technology | RF Materials vs. SIMMTECH 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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