Correlation Between TOPMATERIAL and Samlip General

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

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

Diversification Opportunities for TOPMATERIAL and Samlip General

0.4

Correlation Coefficient

TOPMATERIAL  Samlip General

Very weak diversification

The 3 months correlation between TOPMATERIAL and Samlip is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding TOPMATERIAL LTD and Samlip General Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samlip General 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 Samlip General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samlip General Foods has no effect on the direction of TOPMATERIAL i.e., TOPMATERIAL and Samlip General go up and down completely randomly.

Pair Corralation between TOPMATERIAL and Samlip General

Assuming the 90 days trading horizon TOPMATERIAL LTD is expected to under-perform the Samlip General. In addition to that, TOPMATERIAL is 2.72 times more volatile than Samlip General Foods. It trades about -0.05 of its total potential returns per unit of risk. Samlip General Foods is currently generating about -0.03 per unit of volatility. If you would invest  5,994,542  in Samlip General Foods on October 6, 2024 and sell it today you would lose (744,542) from holding Samlip General Foods or give up 12.42% of portfolio value over 90 days.

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

TOPMATERIAL LTD  vs.  Samlip General Foods

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.

Samlip General Foods

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Samlip General Foods are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samlip General may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with TOPMATERIAL and Samlip General

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

The idea behind TOPMATERIAL LTD and Samlip General Foods 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.