Correlation Between Top Material and SEOJEON ELECTRIC
Can any of the company-specific risk be diversified away by investing in both Top Material and SEOJEON ELECTRIC 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 Top Material and SEOJEON ELECTRIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Top Material Co and SEOJEON ELECTRIC MACHINERY, you can compare the effects of market volatilities on Top Material and SEOJEON ELECTRIC 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 Top Material with a short position of SEOJEON ELECTRIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Top Material and SEOJEON ELECTRIC.
Diversification Opportunities for Top Material and SEOJEON ELECTRIC
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Top and SEOJEON is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Top Material Co and SEOJEON ELECTRIC MACHINERY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEOJEON ELECTRIC MAC and Top Material 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 Top Material Co are associated (or correlated) with SEOJEON ELECTRIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEOJEON ELECTRIC MAC has no effect on the direction of Top Material i.e., Top Material and SEOJEON ELECTRIC go up and down completely randomly.
Pair Corralation between Top Material and SEOJEON ELECTRIC
Assuming the 90 days trading horizon Top Material is expected to generate 6.06 times less return on investment than SEOJEON ELECTRIC. But when comparing it to its historical volatility, Top Material Co is 1.34 times less risky than SEOJEON ELECTRIC. It trades about 0.07 of its potential returns per unit of risk. SEOJEON ELECTRIC MACHINERY is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 402,500 in SEOJEON ELECTRIC MACHINERY on October 25, 2024 and sell it today you would earn a total of 119,500 from holding SEOJEON ELECTRIC MACHINERY or generate 29.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Top Material Co vs. SEOJEON ELECTRIC MACHINERY
Performance |
| Timeline |
| Top Material |
| SEOJEON ELECTRIC MAC |
Top Material and SEOJEON ELECTRIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Top Material and SEOJEON ELECTRIC
The main advantage of trading using opposite Top Material and SEOJEON ELECTRIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Material position performs unexpectedly, SEOJEON ELECTRIC 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 SEOJEON ELECTRIC will offset losses from the drop in SEOJEON ELECTRIC's long position.| Top Material vs. Samsung Electronics Co | Top Material vs. Samsung Electronics Co | Top Material vs. LG Energy Solution | Top Material vs. SK Hynix |
| SEOJEON ELECTRIC vs. Samsung Electronics Co | SEOJEON ELECTRIC vs. Samsung Electronics Co | SEOJEON ELECTRIC vs. KB Financial Group | SEOJEON ELECTRIC vs. Shinhan Financial Group |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |