Correlation Between TOPMATERIAL and System
Can any of the company-specific risk be diversified away by investing in both TOPMATERIAL and System 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 System into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOPMATERIAL LTD and System and Application, you can compare the effects of market volatilities on TOPMATERIAL and System 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 System. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOPMATERIAL and System.
Diversification Opportunities for TOPMATERIAL and System
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TOPMATERIAL and System is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding TOPMATERIAL LTD and System and Application in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on System and Application 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 System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of System and Application has no effect on the direction of TOPMATERIAL i.e., TOPMATERIAL and System go up and down completely randomly.
Pair Corralation between TOPMATERIAL and System
Assuming the 90 days trading horizon TOPMATERIAL LTD is expected to under-perform the System. In addition to that, TOPMATERIAL is 1.24 times more volatile than System and Application. It trades about -0.2 of its total potential returns per unit of risk. System and Application is currently generating about 0.04 per unit of volatility. If you would invest 144,000 in System and Application on August 31, 2024 and sell it today you would earn a total of 2,700 from holding System and Application or generate 1.88% 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. System and Application
Performance |
| Timeline |
| TOPMATERIAL LTD |
| System and Application |
TOPMATERIAL and System Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOPMATERIAL and System
The main advantage of trading using opposite TOPMATERIAL and System positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOPMATERIAL position performs unexpectedly, System 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 System will offset losses from the drop in System's long position.| TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. LG Energy Solution | TOPMATERIAL vs. SK Hynix |
| System vs. Dongsin Engineering Construction | System vs. Doosan Fuel Cell | System vs. Daishin Balance 1 | System vs. Total Soft Bank |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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