Correlation Between Dear Cashmere and THK Co
Can any of the company-specific risk be diversified away by investing in both Dear Cashmere and THK Co 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 Dear Cashmere and THK Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dear Cashmere Holding and THK Co Ltd, you can compare the effects of market volatilities on Dear Cashmere and THK Co 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 Dear Cashmere with a short position of THK Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dear Cashmere and THK Co.
Diversification Opportunities for Dear Cashmere and THK Co
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dear and THK is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Dear Cashmere Holding and THK Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THK Co and Dear Cashmere 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 Dear Cashmere Holding are associated (or correlated) with THK Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THK Co has no effect on the direction of Dear Cashmere i.e., Dear Cashmere and THK Co go up and down completely randomly.
Pair Corralation between Dear Cashmere and THK Co
Given the investment horizon of 90 days Dear Cashmere is expected to generate 1.32 times less return on investment than THK Co. In addition to that, Dear Cashmere is 2.14 times more volatile than THK Co Ltd. It trades about 0.14 of its total potential returns per unit of risk. THK Co Ltd is currently generating about 0.39 per unit of volatility. If you would invest 830.00 in THK Co Ltd on September 3, 2024 and sell it today you would earn a total of 370.00 from holding THK Co Ltd or generate 44.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dear Cashmere Holding vs. THK Co Ltd
Performance |
| Timeline |
| Dear Cashmere Holding |
| THK Co |
Dear Cashmere and THK Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dear Cashmere and THK Co
The main advantage of trading using opposite Dear Cashmere and THK Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dear Cashmere position performs unexpectedly, THK Co 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 THK Co will offset losses from the drop in THK Co's long position.| Dear Cashmere vs. Salesforce | Dear Cashmere vs. SAP SE ADR | Dear Cashmere vs. ServiceNow | Dear Cashmere vs. Intuit Inc |
| THK Co vs. Dear Cashmere Holding | THK Co vs. Goff Corp | THK Co vs. Wialan Technologies | THK Co vs. Cgrowth Capital |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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