Correlation Between SK Bioscience and TK Chemical
Can any of the company-specific risk be diversified away by investing in both SK Bioscience and TK Chemical 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 SK Bioscience and TK Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Bioscience Co and TK Chemical, you can compare the effects of market volatilities on SK Bioscience and TK Chemical 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 SK Bioscience with a short position of TK Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Bioscience and TK Chemical.
Diversification Opportunities for SK Bioscience and TK Chemical
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 302440 and 104480 is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding SK Bioscience Co and TK Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TK Chemical and SK Bioscience 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 SK Bioscience Co are associated (or correlated) with TK Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TK Chemical has no effect on the direction of SK Bioscience i.e., SK Bioscience and TK Chemical go up and down completely randomly.
Pair Corralation between SK Bioscience and TK Chemical
Assuming the 90 days trading horizon SK Bioscience Co is expected to generate 1.2 times more return on investment than TK Chemical. However, SK Bioscience is 1.2 times more volatile than TK Chemical. It trades about -0.05 of its potential returns per unit of risk. TK Chemical is currently generating about -0.06 per unit of risk. If you would invest 6,120,000 in SK Bioscience Co on September 1, 2024 and sell it today you would lose (1,410,000) from holding SK Bioscience Co or give up 23.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.45% |
| Values | Daily Returns |
SK Bioscience Co vs. TK Chemical
Performance |
| Timeline |
| SK Bioscience |
| TK Chemical |
SK Bioscience and TK Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Bioscience and TK Chemical
The main advantage of trading using opposite SK Bioscience and TK Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Bioscience position performs unexpectedly, TK Chemical 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 TK Chemical will offset losses from the drop in TK Chemical's long position.| SK Bioscience vs. SCI Information Service | SK Bioscience vs. Ni Steel | SK Bioscience vs. Jeil Steel Mfg | SK Bioscience vs. Dong A Steel Technology |
| TK Chemical vs. LG Display | TK Chemical vs. Hyundai Motor Co | TK Chemical vs. Hyundai Motor Co | TK Chemical vs. Adaptive Plasma Technology |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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