Correlation Between TK Chemical and Daishin Balance

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

By analyzing existing cross correlation between TK Chemical and Daishin Balance No8, you can compare the effects of market volatilities on TK Chemical and Daishin Balance 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 Daishin Balance. Check out your portfolio center. Please also check ongoing floating volatility patterns of TK Chemical and Daishin Balance.

Diversification Opportunities for TK Chemical and Daishin Balance

-0.76

Correlation Coefficient

TK Chemical  Daishin Balance

Pay attention - limited upside

The 3 months correlation between 104480 and Daishin is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding TK Chemical and Daishin Balance No8 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daishin Balance No8 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 Daishin Balance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daishin Balance No8 has no effect on the direction of TK Chemical i.e., TK Chemical and Daishin Balance go up and down completely randomly.

Pair Corralation between TK Chemical and Daishin Balance

Assuming the 90 days trading horizon TK Chemical is expected to under-perform the Daishin Balance. But the stock apears to be less risky and, when comparing its historical volatility, TK Chemical is 2.11 times less risky than Daishin Balance. The stock trades about -0.27 of its potential returns per unit of risk. The Daishin Balance No8 is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  450,000  in Daishin Balance No8 on December 24, 2024 and sell it today you would earn a total of  174,000  from holding Daishin Balance No8 or generate 38.67% return on investment over 90 days.

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

TK Chemical  vs.  Daishin Balance No8

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.

Daishin Balance No8

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Daishin Balance No8 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daishin Balance sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TK Chemical and Daishin Balance

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

The idea behind TK Chemical and Daishin Balance No8 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.