Correlation Between TOPMATERIAL and Hurum
Can any of the company-specific risk be diversified away by investing in both TOPMATERIAL and Hurum 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 Hurum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOPMATERIAL LTD and Hurum Co, you can compare the effects of market volatilities on TOPMATERIAL and Hurum 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 Hurum. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOPMATERIAL and Hurum.
Diversification Opportunities for TOPMATERIAL and Hurum
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between TOPMATERIAL and Hurum is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding TOPMATERIAL LTD and Hurum Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hurum 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 Hurum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hurum has no effect on the direction of TOPMATERIAL i.e., TOPMATERIAL and Hurum go up and down completely randomly.
Pair Corralation between TOPMATERIAL and Hurum
Assuming the 90 days trading horizon TOPMATERIAL LTD is expected to generate 1.85 times more return on investment than Hurum. However, TOPMATERIAL is 1.85 times more volatile than Hurum Co. It trades about 0.02 of its potential returns per unit of risk. Hurum Co is currently generating about -0.03 per unit of risk. If you would invest 3,215,000 in TOPMATERIAL LTD on October 12, 2024 and sell it today you would lose (335,000) from holding TOPMATERIAL LTD or give up 10.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOPMATERIAL LTD vs. Hurum Co
Performance |
| Timeline |
| TOPMATERIAL LTD |
| Hurum |
TOPMATERIAL and Hurum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOPMATERIAL and Hurum
The main advantage of trading using opposite TOPMATERIAL and Hurum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOPMATERIAL position performs unexpectedly, Hurum 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 Hurum will offset losses from the drop in Hurum's long position.| TOPMATERIAL vs. Lotte Non Life Insurance | TOPMATERIAL vs. KyungIn Electronics Co | TOPMATERIAL vs. Puloon Technology | TOPMATERIAL vs. DB Insurance Co |
| Hurum vs. Handok Clean Tech | Hurum vs. TOPMATERIAL LTD | Hurum vs. Polaris Office Corp | Hurum vs. RF Materials Co |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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