Correlation Between TSI and Narae Nanotech

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

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

Diversification Opportunities for TSI and Narae Nanotech

0.94

Correlation Coefficient

TSI  Narae Nanotech

Almost no diversification

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

Pair Corralation between TSI and Narae Nanotech

Assuming the 90 days trading horizon TSI Co is expected to under-perform the Narae Nanotech. But the stock apears to be less risky and, when comparing its historical volatility, TSI Co is 1.2 times less risky than Narae Nanotech. The stock trades about -0.21 of its potential returns per unit of risk. The Narae Nanotech Corp is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  390,000  in Narae Nanotech Corp on September 5, 2024 and sell it today you would lose (72,500) from holding Narae Nanotech Corp or give up 18.59% of portfolio value over 90 days.

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

TSI Co  vs.  Narae Nanotech Corp

TSI Co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TSI Co 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.

Narae Nanotech Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Narae Nanotech 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 TSI and Narae Nanotech

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

The idea behind TSI Co and Narae Nanotech 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.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.