Correlation Between TK Chemical and Cube Entertainment

Can any of the company-specific risk be diversified away by investing in both TK Chemical and Cube Entertainment 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 TK Chemical and Cube Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for TK Chemical and Cube Entertainment

0.05

Correlation Coefficient

TK Chemical  Cube Entertainment

Significant diversification

The 3 months correlation between 104480 and Cube is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding TK Chemical and Cube Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cube Entertainment and TK Chemical 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 TK Chemical are associated (or correlated) with Cube Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cube Entertainment has no effect on the direction of TK Chemical i.e., TK Chemical and Cube Entertainment go up and down completely randomly.

Pair Corralation between TK Chemical and Cube Entertainment

Assuming the 90 days trading horizon TK Chemical is expected to under-perform the Cube Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, TK Chemical is 1.23 times less risky than Cube Entertainment. The stock trades about -0.04 of its potential returns per unit of risk. The Cube Entertainment is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,100,000  in Cube Entertainment on October 13, 2024 and sell it today you would lose (655,000) from holding Cube Entertainment or give up 31.19% of portfolio value over 90 days.

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

TK Chemical  vs.  Cube Entertainment

TK Chemical

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TK Chemical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, TK Chemical sustained solid returns over the last few months and may actually be approaching a breakup point.

Cube Entertainment

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with TK Chemical and Cube Entertainment

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

The idea behind TK Chemical and Cube Entertainment 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.