Correlation Between KB No4 and Top Material
Can any of the company-specific risk be diversified away by investing in both KB No4 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 KB No4 and Top Material into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KB No4 SPAC and Top Material Co, you can compare the effects of market volatilities on KB No4 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 KB No4 with a short position of Top Material. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB No4 and Top Material.
Diversification Opportunities for KB No4 and Top Material
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 205500 and Top is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding KB No4 SPAC and Top Material Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top Material and KB No4 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 KB No4 SPAC 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 KB No4 i.e., KB No4 and Top Material go up and down completely randomly.
Pair Corralation between KB No4 and Top Material
Assuming the 90 days trading horizon KB No4 SPAC is expected to generate 0.55 times more return on investment than Top Material. However, KB No4 SPAC is 1.82 times less risky than Top Material. It trades about -0.17 of its potential returns per unit of risk. Top Material Co is currently generating about -0.32 per unit of risk. If you would invest 108,700 in KB No4 SPAC on September 12, 2024 and sell it today you would lose (7,300) from holding KB No4 SPAC or give up 6.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
KB No4 SPAC vs. Top Material Co
Performance |
| Timeline |
| KB No4 SPAC |
| Top Material |
KB No4 and Top Material Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB No4 and Top Material
The main advantage of trading using opposite KB No4 and Top Material positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB No4 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.| KB No4 vs. TK Chemical | KB No4 vs. Stic Investments | KB No4 vs. DB Financial Investment | KB No4 vs. Namhae Chemical |
| Top Material vs. Samsung Electronics Co | Top Material vs. Samsung Electronics Co | Top Material vs. LG Energy Solution | Top Material vs. SK Hynix |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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