Correlation Between Hyosung Advanced and Top Material
Can any of the company-specific risk be diversified away by investing in both Hyosung Advanced 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 Hyosung Advanced and Top Material into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyosung Advanced Materials and Top Material Co, you can compare the effects of market volatilities on Hyosung Advanced 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 Hyosung Advanced with a short position of Top Material. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyosung Advanced and Top Material.
Diversification Opportunities for Hyosung Advanced and Top Material
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hyosung and Top is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Hyosung Advanced Materials and Top Material Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top Material and Hyosung 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 Hyosung Advanced Materials 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 Hyosung Advanced i.e., Hyosung Advanced and Top Material go up and down completely randomly.
Pair Corralation between Hyosung Advanced and Top Material
Assuming the 90 days trading horizon Hyosung Advanced Materials is expected to under-perform the Top Material. But the stock apears to be less risky and, when comparing its historical volatility, Hyosung Advanced Materials is 1.0 times less risky than Top Material. The stock trades about -0.55 of its potential returns per unit of risk. The Top Material Co is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest 3,515,000 in Top Material Co on August 29, 2024 and sell it today you would lose (425,000) from holding Top Material Co or give up 12.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyosung Advanced Materials vs. Top Material Co
Performance |
| Timeline |
| Hyosung Advanced Mat |
| Top Material |
Hyosung Advanced and Top Material Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyosung Advanced and Top Material
The main advantage of trading using opposite Hyosung Advanced and Top Material positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyosung Advanced 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.| Hyosung Advanced vs. Busan Industrial Co | Hyosung Advanced vs. Busan Ind | Hyosung Advanced vs. Mirae Asset Daewoo | Hyosung Advanced vs. UNISEM Co |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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