Correlation Between Cheryong Industrial and THiRA UTECH

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

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

Diversification Opportunities for Cheryong Industrial and THiRA UTECH

0.06

Correlation Coefficient

Cheryong Industrial  THiRA UTECH

Significant diversification

The 3 months correlation between Cheryong and THiRA is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Cheryong Industrial CoLtd and THiRA UTECH LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THiRA UTECH LTD and Cheryong 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 Cheryong Industrial CoLtd are associated (or correlated) with THiRA UTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THiRA UTECH LTD has no effect on the direction of Cheryong Industrial i.e., Cheryong Industrial and THiRA UTECH go up and down completely randomly.

Pair Corralation between Cheryong Industrial and THiRA UTECH

Assuming the 90 days trading horizon Cheryong Industrial is expected to generate 3.28 times less return on investment than THiRA UTECH. In addition to that, Cheryong Industrial is 1.26 times more volatile than THiRA UTECH LTD. It trades about 0.03 of its total potential returns per unit of risk. THiRA UTECH LTD is currently generating about 0.11 per unit of volatility. If you would invest  462,500  in THiRA UTECH LTD on December 25, 2024 and sell it today you would earn a total of  101,500  from holding THiRA UTECH LTD or generate 21.95% return on investment over 90 days.

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

Cheryong Industrial CoLtd  vs.  THiRA UTECH LTD

Cheryong Industrial CoLtd

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cheryong Industrial CoLtd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cheryong Industrial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

THiRA UTECH LTD

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in THiRA UTECH LTD are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, THiRA UTECH sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cheryong Industrial and THiRA UTECH

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

The idea behind Cheryong Industrial CoLtd and THiRA UTECH LTD 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.