Correlation Between Total Soft and IM CoLtd
Can any of the company-specific risk be diversified away by investing in both Total Soft and IM CoLtd 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 Total Soft and IM CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Total Soft Bank and IM CoLtd, you can compare the effects of market volatilities on Total Soft and IM CoLtd 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 Total Soft with a short position of IM CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Soft and IM CoLtd.
Diversification Opportunities for Total Soft and IM CoLtd
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Total and 101390 is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Total Soft Bank and IM CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IM CoLtd and Total Soft 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 Total Soft Bank are associated (or correlated) with IM CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IM CoLtd has no effect on the direction of Total Soft i.e., Total Soft and IM CoLtd go up and down completely randomly.
Pair Corralation between Total Soft and IM CoLtd
Assuming the 90 days trading horizon Total Soft Bank is expected to generate 2.29 times more return on investment than IM CoLtd. However, Total Soft is 2.29 times more volatile than IM CoLtd. It trades about 0.15 of its potential returns per unit of risk. IM CoLtd is currently generating about -0.25 per unit of risk. If you would invest 445,500 in Total Soft Bank on November 19, 2024 and sell it today you would earn a total of 365,500 from holding Total Soft Bank or generate 82.04% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.31% |
Values | Daily Returns |
Total Soft Bank vs. IM CoLtd
Performance |
Timeline |
Total Soft Bank |
IM CoLtd |
Total Soft and IM CoLtd Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Total Soft and IM CoLtd
The main advantage of trading using opposite Total Soft and IM CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Total Soft position performs unexpectedly, IM CoLtd 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 IM CoLtd will offset losses from the drop in IM CoLtd's long position.Total Soft vs. Korea Investment Holdings | ||
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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