Correlation Between TOPMATERIAL and RaemongRaein
Can any of the company-specific risk be diversified away by investing in both TOPMATERIAL and RaemongRaein 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 RaemongRaein into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOPMATERIAL LTD and RaemongRaein Co, you can compare the effects of market volatilities on TOPMATERIAL and RaemongRaein 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 RaemongRaein. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOPMATERIAL and RaemongRaein.
Diversification Opportunities for TOPMATERIAL and RaemongRaein
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TOPMATERIAL and RaemongRaein is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding TOPMATERIAL LTD and RaemongRaein Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RaemongRaein 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 RaemongRaein. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RaemongRaein has no effect on the direction of TOPMATERIAL i.e., TOPMATERIAL and RaemongRaein go up and down completely randomly.
Pair Corralation between TOPMATERIAL and RaemongRaein
Assuming the 90 days trading horizon TOPMATERIAL LTD is expected to under-perform the RaemongRaein. But the stock apears to be less risky and, when comparing its historical volatility, TOPMATERIAL LTD is 1.91 times less risky than RaemongRaein. The stock trades about -0.47 of its potential returns per unit of risk. The RaemongRaein Co is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 1,899,000 in RaemongRaein Co on September 5, 2024 and sell it today you would lose (141,000) from holding RaemongRaein Co or give up 7.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
TOPMATERIAL LTD vs. RaemongRaein Co
Performance |
| Timeline |
| TOPMATERIAL LTD |
| RaemongRaein |
TOPMATERIAL and RaemongRaein Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOPMATERIAL and RaemongRaein
The main advantage of trading using opposite TOPMATERIAL and RaemongRaein positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOPMATERIAL position performs unexpectedly, RaemongRaein 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 RaemongRaein will offset losses from the drop in RaemongRaein's long position.| TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. LG Energy Solution | TOPMATERIAL vs. SK Hynix |
| RaemongRaein vs. Ssangyong Materials Corp | RaemongRaein vs. RF Materials Co | RaemongRaein vs. TOPMATERIAL LTD | RaemongRaein vs. Hyosung Advanced Materials |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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