Correlation Between TOPMATERIAL and Next Bt
Can any of the company-specific risk be diversified away by investing in both TOPMATERIAL and Next Bt 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 Next Bt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOPMATERIAL LTD and Next Bt Co, you can compare the effects of market volatilities on TOPMATERIAL and Next Bt 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 Next Bt. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOPMATERIAL and Next Bt.
Diversification Opportunities for TOPMATERIAL and Next Bt
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TOPMATERIAL and Next is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding TOPMATERIAL LTD and Next Bt Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Bt 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 Next Bt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Bt has no effect on the direction of TOPMATERIAL i.e., TOPMATERIAL and Next Bt go up and down completely randomly.
Pair Corralation between TOPMATERIAL and Next Bt
Assuming the 90 days trading horizon TOPMATERIAL LTD is expected to under-perform the Next Bt. In addition to that, TOPMATERIAL is 1.34 times more volatile than Next Bt Co. It trades about -0.32 of its total potential returns per unit of risk. Next Bt Co is currently generating about -0.36 per unit of volatility. If you would invest 22,900 in Next Bt Co on September 12, 2024 and sell it today you would lose (4,000) from holding Next Bt Co or give up 17.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOPMATERIAL LTD vs. Next Bt Co
Performance |
| Timeline |
| TOPMATERIAL LTD |
| Next Bt |
TOPMATERIAL and Next Bt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOPMATERIAL and Next Bt
The main advantage of trading using opposite TOPMATERIAL and Next Bt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOPMATERIAL position performs unexpectedly, Next Bt 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 Next Bt will offset losses from the drop in Next Bt's long position.| TOPMATERIAL vs. Foodnamoo | TOPMATERIAL vs. Sam Yang Foods | TOPMATERIAL vs. Shinsegae Food | TOPMATERIAL vs. Ssangyong Information Communication |
| Next Bt vs. Korea New Network | Next Bt vs. ICD Co | Next Bt vs. DYPNF CoLtd | Next Bt vs. Solution Advanced Technology |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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