Correlation Between TOPMATERIAL and Jahwa Electron
Can any of the company-specific risk be diversified away by investing in both TOPMATERIAL and Jahwa Electron 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 Jahwa Electron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOPMATERIAL LTD and Jahwa Electron, you can compare the effects of market volatilities on TOPMATERIAL and Jahwa Electron 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 Jahwa Electron. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOPMATERIAL and Jahwa Electron.
Diversification Opportunities for TOPMATERIAL and Jahwa Electron
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TOPMATERIAL and Jahwa is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding TOPMATERIAL LTD and Jahwa Electron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jahwa Electron 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 Jahwa Electron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jahwa Electron has no effect on the direction of TOPMATERIAL i.e., TOPMATERIAL and Jahwa Electron go up and down completely randomly.
Pair Corralation between TOPMATERIAL and Jahwa Electron
Assuming the 90 days trading horizon TOPMATERIAL is expected to generate 3.13 times less return on investment than Jahwa Electron. But when comparing it to its historical volatility, TOPMATERIAL LTD is 1.31 times less risky than Jahwa Electron. It trades about 0.11 of its potential returns per unit of risk. Jahwa Electron is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,183,000 in Jahwa Electron on October 28, 2024 and sell it today you would earn a total of 262,000 from holding Jahwa Electron or generate 22.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOPMATERIAL LTD vs. Jahwa Electron
Performance |
| Timeline |
| TOPMATERIAL LTD |
| Jahwa Electron |
TOPMATERIAL and Jahwa Electron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOPMATERIAL and Jahwa Electron
The main advantage of trading using opposite TOPMATERIAL and Jahwa Electron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOPMATERIAL position performs unexpectedly, Jahwa Electron 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 Jahwa Electron will offset losses from the drop in Jahwa Electron's long position.| TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. LG Energy Solution | TOPMATERIAL vs. SK Hynix |
| Jahwa Electron vs. Samsung Electronics Co | Jahwa Electron vs. Samsung Electronics Co | Jahwa Electron vs. SK Hynix | Jahwa Electron vs. HMM Co |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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