Correlation Between Ray Co and Taeyang Metal
Can any of the company-specific risk be diversified away by investing in both Ray Co 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 Ray Co and Taeyang Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ray Co and Taeyang Metal Industrial, you can compare the effects of market volatilities on Ray Co 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 Ray Co with a short position of Taeyang Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ray Co and Taeyang Metal.
Diversification Opportunities for Ray Co and Taeyang Metal
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ray and Taeyang is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ray Co 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 Ray Co 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 Ray Co 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 Ray Co i.e., Ray Co and Taeyang Metal go up and down completely randomly.
Pair Corralation between Ray Co and Taeyang Metal
Assuming the 90 days trading horizon Ray Co is expected to under-perform the Taeyang Metal. But the stock apears to be less risky and, when comparing its historical volatility, Ray Co is 2.14 times less risky than Taeyang Metal. The stock trades about -0.26 of its potential returns per unit of risk. The Taeyang Metal Industrial is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 507,000 in Taeyang Metal Industrial on September 12, 2024 and sell it today you would lose (8,500) from holding Taeyang Metal Industrial or give up 1.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ray Co vs. Taeyang Metal Industrial
Performance |
| Timeline |
| Ray Co |
| Taeyang Metal Industrial |
Ray Co and Taeyang Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ray Co and Taeyang Metal
The main advantage of trading using opposite Ray Co and Taeyang Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ray Co 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.| Ray Co vs. KIWI Media Group | Ray Co vs. Hanjin Transportation Co | Ray Co vs. Mgame Corp | Ray Co vs. TJ media Co |
| Taeyang Metal vs. Samsung Electronics Co | Taeyang Metal vs. Samsung Electronics Co | Taeyang Metal vs. SK Hynix | Taeyang Metal vs. POSCO Holdings |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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