Correlation Between TOPMATERIAL and Aprogen Healthcare
Can any of the company-specific risk be diversified away by investing in both TOPMATERIAL and Aprogen Healthcare 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 Aprogen Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOPMATERIAL LTD and Aprogen Healthcare Games, you can compare the effects of market volatilities on TOPMATERIAL and Aprogen Healthcare 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 Aprogen Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOPMATERIAL and Aprogen Healthcare.
Diversification Opportunities for TOPMATERIAL and Aprogen Healthcare
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TOPMATERIAL and Aprogen is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding TOPMATERIAL LTD and Aprogen Healthcare Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aprogen Healthcare Games 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 Aprogen Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aprogen Healthcare Games has no effect on the direction of TOPMATERIAL i.e., TOPMATERIAL and Aprogen Healthcare go up and down completely randomly.
Pair Corralation between TOPMATERIAL and Aprogen Healthcare
Assuming the 90 days trading horizon TOPMATERIAL LTD is expected to under-perform the Aprogen Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, TOPMATERIAL LTD is 1.69 times less risky than Aprogen Healthcare. The stock trades about -0.48 of its potential returns per unit of risk. The Aprogen Healthcare Games is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest 55,400 in Aprogen Healthcare Games on September 3, 2024 and sell it today you would lose (9,600) from holding Aprogen Healthcare Games or give up 17.33% 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. Aprogen Healthcare Games
Performance |
| Timeline |
| TOPMATERIAL LTD |
| Aprogen Healthcare Games |
TOPMATERIAL and Aprogen Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOPMATERIAL and Aprogen Healthcare
The main advantage of trading using opposite TOPMATERIAL and Aprogen Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOPMATERIAL position performs unexpectedly, Aprogen Healthcare 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 Aprogen Healthcare will offset losses from the drop in Aprogen Healthcare's 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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