Correlation Between TOPMATERIAL and Shinsegae Information
Can any of the company-specific risk be diversified away by investing in both TOPMATERIAL and Shinsegae Information 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 Shinsegae Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOPMATERIAL LTD and Shinsegae Information Communication, you can compare the effects of market volatilities on TOPMATERIAL and Shinsegae Information 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 Shinsegae Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOPMATERIAL and Shinsegae Information.
Diversification Opportunities for TOPMATERIAL and Shinsegae Information
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TOPMATERIAL and Shinsegae is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding TOPMATERIAL LTD and Shinsegae Information Communic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsegae Information 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 Shinsegae Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinsegae Information has no effect on the direction of TOPMATERIAL i.e., TOPMATERIAL and Shinsegae Information go up and down completely randomly.
Pair Corralation between TOPMATERIAL and Shinsegae Information
Assuming the 90 days trading horizon TOPMATERIAL LTD is expected to generate 2.17 times more return on investment than Shinsegae Information. However, TOPMATERIAL is 2.17 times more volatile than Shinsegae Information Communication. It trades about 0.02 of its potential returns per unit of risk. Shinsegae Information Communication is currently generating about -0.01 per unit of risk. If you would invest 3,040,000 in TOPMATERIAL LTD on September 20, 2024 and sell it today you would lose (255,000) from holding TOPMATERIAL LTD or give up 8.39% 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. Shinsegae Information Communic
Performance |
| Timeline |
| TOPMATERIAL LTD |
| Shinsegae Information |
TOPMATERIAL and Shinsegae Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOPMATERIAL and Shinsegae Information
The main advantage of trading using opposite TOPMATERIAL and Shinsegae Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOPMATERIAL position performs unexpectedly, Shinsegae Information 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 Shinsegae Information will offset losses from the drop in Shinsegae Information's long position.| TOPMATERIAL vs. Wave Electronics Co | TOPMATERIAL vs. Anam Electronics Co | TOPMATERIAL vs. Koryo Credit Information | TOPMATERIAL vs. DB Insurance Co |
| Shinsegae Information vs. Top Material Co | Shinsegae Information vs. TOPMATERIAL LTD | Shinsegae Information vs. Samlip General Foods | Shinsegae Information vs. PI Advanced Materials |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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