Correlation Between INNOX Advanced and Tae Kyung

Can any of the company-specific risk be diversified away by investing in both INNOX Advanced and Tae Kyung 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 INNOX Advanced and Tae Kyung into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for INNOX Advanced and Tae Kyung

0.28

Correlation Coefficient

INNOX Advanced  Tae Kyung

Modest diversification

The 3 months correlation between INNOX and Tae is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding INNOX Advanced Materials and Tae Kyung Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tae Kyung Chemical and INNOX Advanced 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 INNOX Advanced Materials are associated (or correlated) with Tae Kyung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tae Kyung Chemical has no effect on the direction of INNOX Advanced i.e., INNOX Advanced and Tae Kyung go up and down completely randomly.

Pair Corralation between INNOX Advanced and Tae Kyung

Assuming the 90 days trading horizon INNOX Advanced Materials is expected to under-perform the Tae Kyung. In addition to that, INNOX Advanced is 1.44 times more volatile than Tae Kyung Chemical. It trades about 0.0 of its total potential returns per unit of risk. Tae Kyung Chemical is currently generating about 0.01 per unit of volatility. If you would invest  1,127,580  in Tae Kyung Chemical on October 11, 2024 and sell it today you would lose (22,580) from holding Tae Kyung Chemical or give up 2.0% of portfolio value over 90 days.

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

INNOX Advanced Materials  vs.  Tae Kyung Chemical

INNOX Advanced Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INNOX Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, INNOX Advanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tae Kyung Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tae Kyung Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with INNOX Advanced and Tae Kyung

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

The idea behind INNOX Advanced Materials and Tae Kyung Chemical 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 Stocks Directory module to find actively traded stocks across global markets.