Correlation Between INNOX Advanced and TOPMATERIAL
Can any of the company-specific risk be diversified away by investing in both INNOX Advanced and TOPMATERIAL 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 INNOX Advanced and TOPMATERIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INNOX Advanced Materials and TOPMATERIAL LTD, you can compare the effects of market volatilities on INNOX Advanced and TOPMATERIAL 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 INNOX Advanced with a short position of TOPMATERIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of INNOX Advanced and TOPMATERIAL.
Diversification Opportunities for INNOX Advanced and TOPMATERIAL
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between INNOX and TOPMATERIAL is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding INNOX Advanced Materials and TOPMATERIAL LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOPMATERIAL LTD and INNOX Advanced 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 INNOX Advanced Materials are associated (or correlated) with TOPMATERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOPMATERIAL LTD has no effect on the direction of INNOX Advanced i.e., INNOX Advanced and TOPMATERIAL go up and down completely randomly.
Pair Corralation between INNOX Advanced and TOPMATERIAL
Assuming the 90 days trading horizon INNOX Advanced Materials is expected to generate 0.9 times more return on investment than TOPMATERIAL. However, INNOX Advanced Materials is 1.11 times less risky than TOPMATERIAL. It trades about -0.29 of its potential returns per unit of risk. TOPMATERIAL LTD is currently generating about -0.48 per unit of risk. If you would invest 2,490,000 in INNOX Advanced Materials on September 3, 2024 and sell it today you would lose (345,000) from holding INNOX Advanced Materials or give up 13.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
INNOX Advanced Materials vs. TOPMATERIAL LTD
Performance |
| Timeline |
| INNOX Advanced Materials |
| TOPMATERIAL LTD |
INNOX Advanced and TOPMATERIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INNOX Advanced and TOPMATERIAL
The main advantage of trading using opposite INNOX Advanced and TOPMATERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INNOX Advanced position performs unexpectedly, TOPMATERIAL 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 TOPMATERIAL will offset losses from the drop in TOPMATERIAL's long position.| INNOX Advanced vs. SK Hynix | INNOX Advanced vs. LX Semicon Co | INNOX Advanced vs. Tokai Carbon Korea | INNOX Advanced vs. People Technology |
| TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. LG Energy Solution | TOPMATERIAL 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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