Correlation Between TOPMATERIAL and Samyang Foods

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

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

Diversification Opportunities for TOPMATERIAL and Samyang Foods

-0.61

Correlation Coefficient

TOPMATERIAL  Samyang Foods

Excellent diversification

The 3 months correlation between TOPMATERIAL and Samyang is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding TOPMATERIAL LTD and Samyang Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samyang Foods and TOPMATERIAL 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 TOPMATERIAL LTD are associated (or correlated) with Samyang Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samyang Foods has no effect on the direction of TOPMATERIAL i.e., TOPMATERIAL and Samyang Foods go up and down completely randomly.

Pair Corralation between TOPMATERIAL and Samyang Foods

Assuming the 90 days trading horizon TOPMATERIAL LTD is expected to under-perform the Samyang Foods. In addition to that, TOPMATERIAL is 1.07 times more volatile than Samyang Foods Co. It trades about -0.16 of its total potential returns per unit of risk. Samyang Foods Co is currently generating about 0.19 per unit of volatility. If you would invest  52,400,000  in Samyang Foods Co on October 8, 2024 and sell it today you would earn a total of  21,700,000  from holding Samyang Foods Co or generate 41.41% return on investment over 90 days.

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

TOPMATERIAL LTD  vs.  Samyang Foods Co

TOPMATERIAL LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TOPMATERIAL LTD 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Samyang Foods

Risk-Adjusted Performance

14 of 100

Good

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

Pair Trading with TOPMATERIAL and Samyang Foods

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

The idea behind TOPMATERIAL LTD and Samyang Foods Co 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.