Correlation Between TOPMATERIAL and Korea Gas
Can any of the company-specific risk be diversified away by investing in both TOPMATERIAL and Korea Gas 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 Korea Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOPMATERIAL LTD and Korea Gas, you can compare the effects of market volatilities on TOPMATERIAL and Korea Gas 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 Korea Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOPMATERIAL and Korea Gas.
Diversification Opportunities for TOPMATERIAL and Korea Gas
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TOPMATERIAL and Korea is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding TOPMATERIAL LTD and Korea Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Gas 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 Korea Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Gas has no effect on the direction of TOPMATERIAL i.e., TOPMATERIAL and Korea Gas go up and down completely randomly.
Pair Corralation between TOPMATERIAL and Korea Gas
Assuming the 90 days trading horizon TOPMATERIAL LTD is expected to generate 0.58 times more return on investment than Korea Gas. However, TOPMATERIAL LTD is 1.73 times less risky than Korea Gas. It trades about -0.16 of its potential returns per unit of risk. Korea Gas is currently generating about -0.12 per unit of risk. If you would invest 3,145,000 in TOPMATERIAL LTD on September 13, 2024 and sell it today you would lose (375,000) from holding TOPMATERIAL LTD or give up 11.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOPMATERIAL LTD vs. Korea Gas
Performance |
| Timeline |
| TOPMATERIAL LTD |
| Korea Gas |
TOPMATERIAL and Korea Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOPMATERIAL and Korea Gas
The main advantage of trading using opposite TOPMATERIAL and Korea Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOPMATERIAL position performs unexpectedly, Korea Gas 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 Korea Gas will offset losses from the drop in Korea Gas' long position.| TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. LG Energy Solution | TOPMATERIAL vs. SK Hynix |
| Korea Gas vs. Hyosung Advanced Materials | Korea Gas vs. Union Materials Corp | Korea Gas vs. Iljin Materials Co | Korea Gas 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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