Correlation Between Top Material and INNOX Advanced
Can any of the company-specific risk be diversified away by investing in both Top Material and INNOX Advanced 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 INNOX Advanced 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 INNOX Advanced Materials, you can compare the effects of market volatilities on Top Material and INNOX Advanced 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 INNOX Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Top Material and INNOX Advanced.
Diversification Opportunities for Top Material and INNOX Advanced
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Top and INNOX is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Top Material Co and INNOX Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INNOX Advanced Materials 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 INNOX Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INNOX Advanced Materials has no effect on the direction of Top Material i.e., Top Material and INNOX Advanced go up and down completely randomly.
Pair Corralation between Top Material and INNOX Advanced
Assuming the 90 days trading horizon Top Material Co is expected to generate 1.58 times more return on investment than INNOX Advanced. However, Top Material is 1.58 times more volatile than INNOX Advanced Materials. It trades about 0.02 of its potential returns per unit of risk. INNOX Advanced Materials is currently generating about -0.01 per unit of risk. If you would invest 3,178,559 in Top Material Co on August 31, 2024 and sell it today you would lose (158,559) from holding Top Material Co or give up 4.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Top Material Co vs. INNOX Advanced Materials
Performance |
| Timeline |
| Top Material |
| INNOX Advanced Materials |
Top Material and INNOX Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Top Material and INNOX Advanced
The main advantage of trading using opposite Top Material and INNOX Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Material position performs unexpectedly, INNOX Advanced 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 INNOX Advanced will offset losses from the drop in INNOX Advanced's long position.| Top Material vs. Barunson Entertainment Arts | Top Material vs. SM Entertainment Co | Top Material vs. JYP Entertainment Corp | Top Material vs. Histeel |
| INNOX Advanced vs. SK Hynix | INNOX Advanced vs. LX Semicon Co | INNOX Advanced vs. Tokai Carbon Korea | INNOX Advanced vs. People 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |