Correlation Between TS Investment and Hyosung Chemical

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

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

Diversification Opportunities for TS Investment and Hyosung Chemical

0.94

Correlation Coefficient

TS Investment  Hyosung Chemical

Almost no diversification

The 3 months correlation between 246690 and Hyosung is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding TS Investment Corp and Hyosung Chemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyosung Chemical Corp and TS Investment 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 TS Investment Corp are associated (or correlated) with Hyosung Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyosung Chemical Corp has no effect on the direction of TS Investment i.e., TS Investment and Hyosung Chemical go up and down completely randomly.

Pair Corralation between TS Investment and Hyosung Chemical

Assuming the 90 days trading horizon TS Investment Corp is expected to under-perform the Hyosung Chemical. But the stock apears to be less risky and, when comparing its historical volatility, TS Investment Corp is 3.09 times less risky than Hyosung Chemical. The stock trades about -0.19 of its potential returns per unit of risk. The Hyosung Chemical Corp is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  4,610,000  in Hyosung Chemical Corp on September 3, 2024 and sell it today you would lose (860,000) from holding Hyosung Chemical Corp or give up 18.66% of portfolio value over 90 days.

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

TS Investment Corp  vs.  Hyosung Chemical Corp

TS Investment Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TS Investment Corp 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Hyosung Chemical Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with TS Investment and Hyosung Chemical

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

The idea behind TS Investment Corp and Hyosung Chemical Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.