Correlation Between Taeyang Metal and Mobile Appliance

Can any of the company-specific risk be diversified away by investing in both Taeyang Metal and Mobile Appliance 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 Taeyang Metal and Mobile Appliance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Taeyang Metal Industrial and Mobile Appliance, you can compare the effects of market volatilities on Taeyang Metal and Mobile Appliance 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 Taeyang Metal with a short position of Mobile Appliance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taeyang Metal and Mobile Appliance.

Diversification Opportunities for Taeyang Metal and Mobile Appliance

-0.07

Correlation Coefficient

Taeyang Metal  Mobile Appliance

Good diversification

The 3 months correlation between Taeyang and Mobile is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Taeyang Metal Industrial and Mobile Appliance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobile Appliance and Taeyang Metal 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 Taeyang Metal Industrial are associated (or correlated) with Mobile Appliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobile Appliance has no effect on the direction of Taeyang Metal i.e., Taeyang Metal and Mobile Appliance go up and down completely randomly.

Pair Corralation between Taeyang Metal and Mobile Appliance

Assuming the 90 days trading horizon Taeyang Metal Industrial is expected to generate 2.51 times more return on investment than Mobile Appliance. However, Taeyang Metal is 2.51 times more volatile than Mobile Appliance. It trades about 0.09 of its potential returns per unit of risk. Mobile Appliance is currently generating about 0.02 per unit of risk. If you would invest  414,908  in Taeyang Metal Industrial on November 29, 2024 and sell it today you would earn a total of  100,092  from holding Taeyang Metal Industrial or generate 24.12% return on investment over 90 days.

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

Taeyang Metal Industrial  vs.  Mobile Appliance

Taeyang Metal Industrial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Taeyang Metal Industrial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Taeyang Metal sustained solid returns over the last few months and may actually be approaching a breakup point.

Mobile Appliance

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mobile Appliance are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Mobile Appliance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Taeyang Metal and Mobile Appliance

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

The idea behind Taeyang Metal Industrial and Mobile Appliance 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.