Correlation Between TOPMATERIAL and Hwangkum Steel
Can any of the company-specific risk be diversified away by investing in both TOPMATERIAL and Hwangkum 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 Hwangkum 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 Hwangkum Steel Technology, you can compare the effects of market volatilities on TOPMATERIAL and Hwangkum 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 Hwangkum Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOPMATERIAL and Hwangkum Steel.
Diversification Opportunities for TOPMATERIAL and Hwangkum Steel
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between TOPMATERIAL and Hwangkum is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding TOPMATERIAL LTD and Hwangkum Steel Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwangkum Steel Technology 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 Hwangkum Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwangkum Steel Technology has no effect on the direction of TOPMATERIAL i.e., TOPMATERIAL and Hwangkum Steel go up and down completely randomly.
Pair Corralation between TOPMATERIAL and Hwangkum Steel
Assuming the 90 days trading horizon TOPMATERIAL LTD is expected to generate 2.51 times more return on investment than Hwangkum Steel. However, TOPMATERIAL is 2.51 times more volatile than Hwangkum Steel Technology. It trades about 0.02 of its potential returns per unit of risk. Hwangkum Steel Technology is currently generating about -0.03 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 | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOPMATERIAL LTD vs. Hwangkum Steel Technology
Performance |
| Timeline |
| TOPMATERIAL LTD |
| Hwangkum Steel Technology |
TOPMATERIAL and Hwangkum Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOPMATERIAL and Hwangkum Steel
The main advantage of trading using opposite TOPMATERIAL and Hwangkum Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOPMATERIAL position performs unexpectedly, Hwangkum 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 Hwangkum Steel will offset losses from the drop in Hwangkum Steel's long position.| TOPMATERIAL vs. Lotte Non Life Insurance | TOPMATERIAL vs. KyungIn Electronics Co | TOPMATERIAL vs. Puloon Technology | TOPMATERIAL vs. DB Insurance Co |
| Hwangkum Steel vs. AptaBio Therapeutics | Hwangkum Steel vs. Daewoo SBI SPAC | Hwangkum Steel vs. Dream Security co | Hwangkum Steel vs. Microfriend |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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