Correlation Between TOPMATERIAL and Ssangyong Materials
Can any of the company-specific risk be diversified away by investing in both TOPMATERIAL and Ssangyong Materials 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 Ssangyong Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOPMATERIAL LTD and Ssangyong Materials Corp, you can compare the effects of market volatilities on TOPMATERIAL and Ssangyong Materials 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 Ssangyong Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOPMATERIAL and Ssangyong Materials.
Diversification Opportunities for TOPMATERIAL and Ssangyong Materials
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TOPMATERIAL and Ssangyong is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding TOPMATERIAL LTD and Ssangyong Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ssangyong Materials Corp 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 Ssangyong Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ssangyong Materials Corp has no effect on the direction of TOPMATERIAL i.e., TOPMATERIAL and Ssangyong Materials go up and down completely randomly.
Pair Corralation between TOPMATERIAL and Ssangyong Materials
Assuming the 90 days trading horizon TOPMATERIAL LTD is expected to under-perform the Ssangyong Materials. But the stock apears to be less risky and, when comparing its historical volatility, TOPMATERIAL LTD is 1.06 times less risky than Ssangyong Materials. The stock trades about -0.2 of its potential returns per unit of risk. The Ssangyong Materials Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 239,500 in Ssangyong Materials Corp on August 31, 2024 and sell it today you would earn a total of 3,500 from holding Ssangyong Materials Corp or generate 1.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOPMATERIAL LTD vs. Ssangyong Materials Corp
Performance |
| Timeline |
| TOPMATERIAL LTD |
| Ssangyong Materials Corp |
TOPMATERIAL and Ssangyong Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOPMATERIAL and Ssangyong Materials
The main advantage of trading using opposite TOPMATERIAL and Ssangyong Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOPMATERIAL position performs unexpectedly, Ssangyong Materials 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 Ssangyong Materials will offset losses from the drop in Ssangyong Materials' long position.| TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. LG Energy Solution | TOPMATERIAL vs. SK Hynix |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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