Correlation Between TOPMATERIAL and Seojin Automotive
Can any of the company-specific risk be diversified away by investing in both TOPMATERIAL and Seojin Automotive 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 Seojin Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOPMATERIAL LTD and Seojin Automotive CoLtd, you can compare the effects of market volatilities on TOPMATERIAL and Seojin Automotive 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 Seojin Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOPMATERIAL and Seojin Automotive.
Diversification Opportunities for TOPMATERIAL and Seojin Automotive
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TOPMATERIAL and Seojin is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding TOPMATERIAL LTD and Seojin Automotive CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seojin Automotive CoLtd 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 Seojin Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seojin Automotive CoLtd has no effect on the direction of TOPMATERIAL i.e., TOPMATERIAL and Seojin Automotive go up and down completely randomly.
Pair Corralation between TOPMATERIAL and Seojin Automotive
Assuming the 90 days trading horizon TOPMATERIAL LTD is expected to under-perform the Seojin Automotive. In addition to that, TOPMATERIAL is 1.61 times more volatile than Seojin Automotive CoLtd. It trades about -0.07 of its total potential returns per unit of risk. Seojin Automotive CoLtd is currently generating about -0.08 per unit of volatility. If you would invest 330,500 in Seojin Automotive CoLtd on September 3, 2024 and sell it today you would lose (132,400) from holding Seojin Automotive CoLtd or give up 40.06% 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. Seojin Automotive CoLtd
Performance |
| Timeline |
| TOPMATERIAL LTD |
| Seojin Automotive CoLtd |
TOPMATERIAL and Seojin Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOPMATERIAL and Seojin Automotive
The main advantage of trading using opposite TOPMATERIAL and Seojin Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOPMATERIAL position performs unexpectedly, Seojin Automotive 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 Seojin Automotive will offset losses from the drop in Seojin Automotive'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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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