Correlation Between TOPMATERIAL and Kukdong Oil
Can any of the company-specific risk be diversified away by investing in both TOPMATERIAL and Kukdong Oil 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 TOPMATERIAL and Kukdong Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOPMATERIAL LTD and Kukdong Oil Chemicals, you can compare the effects of market volatilities on TOPMATERIAL and Kukdong Oil 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 TOPMATERIAL with a short position of Kukdong Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOPMATERIAL and Kukdong Oil.
Diversification Opportunities for TOPMATERIAL and Kukdong Oil
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TOPMATERIAL and Kukdong is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding TOPMATERIAL LTD and Kukdong Oil Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukdong Oil Chemicals and TOPMATERIAL 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 TOPMATERIAL LTD are associated (or correlated) with Kukdong Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kukdong Oil Chemicals has no effect on the direction of TOPMATERIAL i.e., TOPMATERIAL and Kukdong Oil go up and down completely randomly.
Pair Corralation between TOPMATERIAL and Kukdong Oil
Assuming the 90 days trading horizon TOPMATERIAL LTD is expected to generate 1.55 times more return on investment than Kukdong Oil. However, TOPMATERIAL is 1.55 times more volatile than Kukdong Oil Chemicals. It trades about 0.02 of its potential returns per unit of risk. Kukdong Oil Chemicals is currently generating about 0.02 per unit of risk. If you would invest 3,215,000 in TOPMATERIAL LTD on October 13, 2024 and sell it today you would lose (335,000) from holding TOPMATERIAL LTD or give up 10.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOPMATERIAL LTD vs. Kukdong Oil Chemicals
Performance |
| Timeline |
| TOPMATERIAL LTD |
| Kukdong Oil Chemicals |
TOPMATERIAL and Kukdong Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOPMATERIAL and Kukdong Oil
The main advantage of trading using opposite TOPMATERIAL and Kukdong Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOPMATERIAL position performs unexpectedly, Kukdong Oil 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 Kukdong Oil will offset losses from the drop in Kukdong Oil's long position.| TOPMATERIAL vs. Ssangyong Information Communication | TOPMATERIAL vs. Hannong Chemicals | TOPMATERIAL vs. Miwon Chemicals Co | TOPMATERIAL vs. LG Chemicals |
| Kukdong Oil vs. ITM Semiconductor Co | Kukdong Oil vs. Hanmi Semiconductor Co | Kukdong Oil vs. LS Materials | Kukdong Oil vs. TOPMATERIAL LTD |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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