Correlation Between Haesung Industrial and TSI Co

Can any of the company-specific risk be diversified away by investing in both Haesung Industrial and TSI 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 Haesung Industrial and TSI Co into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Haesung Industrial and TSI Co

0.88

Correlation Coefficient

Haesung Industrial  TSI Co

Very poor diversification

The 3 months correlation between Haesung and TSI is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Haesung Industrial Co and TSI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TSI Co and Haesung Industrial 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 Haesung Industrial Co are associated (or correlated) with TSI Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TSI Co has no effect on the direction of Haesung Industrial i.e., Haesung Industrial and TSI Co go up and down completely randomly.

Pair Corralation between Haesung Industrial and TSI Co

Assuming the 90 days trading horizon Haesung Industrial Co is expected to generate 0.75 times more return on investment than TSI Co. However, Haesung Industrial Co is 1.34 times less risky than TSI Co. It trades about -0.08 of its potential returns per unit of risk. TSI Co is currently generating about -0.13 per unit of risk. If you would invest  614,000  in Haesung Industrial Co on September 28, 2024 and sell it today you would lose (26,000) from holding Haesung Industrial Co or give up 4.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Haesung Industrial Co  vs.  TSI Co

Haesung Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Haesung Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

TSI Co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TSI Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Haesung Industrial and TSI Co

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

The idea behind Haesung Industrial Co and TSI Co 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.