Correlation Between Tae Kyung and Stic Investments

Can any of the company-specific risk be diversified away by investing in both Tae Kyung and Stic Investments 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 Tae Kyung and Stic Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Tae Kyung and Stic Investments

-0.01

Correlation Coefficient

Tae Kyung  Stic Investments

Good diversification

The 3 months correlation between Tae and Stic is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Tae Kyung Chemical and Stic Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stic Investments and Tae Kyung 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 Tae Kyung Chemical are associated (or correlated) with Stic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stic Investments has no effect on the direction of Tae Kyung i.e., Tae Kyung and Stic Investments go up and down completely randomly.

Pair Corralation between Tae Kyung and Stic Investments

Assuming the 90 days trading horizon Tae Kyung Chemical is expected to under-perform the Stic Investments. But the stock apears to be less risky and, when comparing its historical volatility, Tae Kyung Chemical is 1.15 times less risky than Stic Investments. The stock trades about -0.03 of its potential returns per unit of risk. The Stic Investments is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  685,000  in Stic Investments on September 21, 2024 and sell it today you would earn a total of  165,000  from holding Stic Investments or generate 24.09% return on investment over 90 days.

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

Tae Kyung Chemical  vs.  Stic Investments

Tae Kyung Chemical

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tae Kyung Chemical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tae Kyung may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Stic Investments

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Stic Investments are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Stic Investments may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Tae Kyung and Stic Investments

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

The idea behind Tae Kyung Chemical and Stic Investments 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.