Correlation Between TOPMATERIAL and J Steel
Can any of the company-specific risk be diversified away by investing in both TOPMATERIAL and J Steel 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 J Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOPMATERIAL LTD and J Steel Co, you can compare the effects of market volatilities on TOPMATERIAL and J Steel 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 J Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOPMATERIAL and J Steel.
Diversification Opportunities for TOPMATERIAL and J Steel
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TOPMATERIAL and 023440 is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding TOPMATERIAL LTD and J Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Steel 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 J Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Steel has no effect on the direction of TOPMATERIAL i.e., TOPMATERIAL and J Steel go up and down completely randomly.
Pair Corralation between TOPMATERIAL and J Steel
Assuming the 90 days trading horizon TOPMATERIAL LTD is expected to under-perform the J Steel. But the stock apears to be less risky and, when comparing its historical volatility, TOPMATERIAL LTD is 1.75 times less risky than J Steel. The stock trades about -0.2 of its potential returns per unit of risk. The J Steel Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 167,800 in J Steel Co on August 31, 2024 and sell it today you would earn a total of 12,100 from holding J Steel Co or generate 7.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOPMATERIAL LTD vs. J Steel Co
Performance |
| Timeline |
| TOPMATERIAL LTD |
| J Steel |
TOPMATERIAL and J Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOPMATERIAL and J Steel
The main advantage of trading using opposite TOPMATERIAL and J Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOPMATERIAL position performs unexpectedly, J Steel 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 J Steel will offset losses from the drop in J Steel's long position.| TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. LG Energy Solution | TOPMATERIAL vs. SK Hynix |
| J Steel vs. Samsung Electronics Co | J Steel vs. Samsung Electronics Co | J Steel vs. LG Energy Solution | J Steel 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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