Correlation Between TK Chemical and Daewoo SBI

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

By analyzing existing cross correlation between TK Chemical and Daewoo SBI SPAC, you can compare the effects of market volatilities on TK Chemical and Daewoo SBI 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 Daewoo SBI. Check out your portfolio center. Please also check ongoing floating volatility patterns of TK Chemical and Daewoo SBI.

Diversification Opportunities for TK Chemical and Daewoo SBI

0.4

Correlation Coefficient

TK Chemical  Daewoo SBI

Very weak diversification

The 3 months correlation between 104480 and Daewoo is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding TK Chemical and Daewoo SBI SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewoo SBI SPAC 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 Daewoo SBI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewoo SBI SPAC has no effect on the direction of TK Chemical i.e., TK Chemical and Daewoo SBI go up and down completely randomly.

Pair Corralation between TK Chemical and Daewoo SBI

Assuming the 90 days trading horizon TK Chemical is expected to under-perform the Daewoo SBI. But the stock apears to be less risky and, when comparing its historical volatility, TK Chemical is 1.4 times less risky than Daewoo SBI. The stock trades about -0.22 of its potential returns per unit of risk. The Daewoo SBI SPAC is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  270,500  in Daewoo SBI SPAC on December 25, 2024 and sell it today you would lose (35,000) from holding Daewoo SBI SPAC or give up 12.94% of portfolio value over 90 days.

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

TK Chemical  vs.  Daewoo SBI SPAC

TK Chemical

Risk-Adjusted Performance

Very Weak

Over the last 90 days TK Chemical 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Daewoo SBI SPAC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Daewoo SBI SPAC 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with TK Chemical and Daewoo SBI

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

The idea behind TK Chemical and Daewoo SBI SPAC 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..