Correlation Between Tcc Steel and Korea Petro

Can any of the company-specific risk be diversified away by investing in both Tcc Steel and Korea Petro 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 Tcc Steel and Korea Petro into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tcc Steel and Korea Petro Chemical, you can compare the effects of market volatilities on Tcc Steel and Korea Petro 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 Tcc Steel with a short position of Korea Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tcc Steel and Korea Petro.

Diversification Opportunities for Tcc Steel and Korea Petro

-0.48

Correlation Coefficient

Tcc Steel  Korea Petro

Very good diversification

The 3 months correlation between Tcc and Korea is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Tcc Steel and Korea Petro Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Petro Chemical and Tcc Steel 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 Tcc Steel are associated (or correlated) with Korea Petro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Petro Chemical has no effect on the direction of Tcc Steel i.e., Tcc Steel and Korea Petro go up and down completely randomly.

Pair Corralation between Tcc Steel and Korea Petro

Assuming the 90 days trading horizon Tcc Steel is expected to under-perform the Korea Petro. In addition to that, Tcc Steel is 1.19 times more volatile than Korea Petro Chemical. It trades about 0.0 of its total potential returns per unit of risk. Korea Petro Chemical is currently generating about 0.14 per unit of volatility. If you would invest  7,808,590  in Korea Petro Chemical on December 24, 2024 and sell it today you would earn a total of  2,091,410  from holding Korea Petro Chemical or generate 26.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Tcc Steel  vs.  Korea Petro Chemical

Tcc Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tcc Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Tcc Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Korea Petro Chemical

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Korea Petro Chemical are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Korea Petro sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tcc Steel and Korea Petro

The main advantage of trading using opposite Tcc Steel and Korea Petro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tcc Steel position performs unexpectedly, Korea Petro 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 Korea Petro will offset losses from the drop in Korea Petro's long position.

The idea behind Tcc Steel and Korea Petro Chemical pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.