Correlation Between TDK and Gateway Real

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

By analyzing existing cross correlation between TDK Corporation and Gateway Real Estate, you can compare the effects of market volatilities on TDK and Gateway Real 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 TDK with a short position of Gateway Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of TDK and Gateway Real.

Diversification Opportunities for TDK and Gateway Real

0.14

Correlation Coefficient

TDK  Gateway Real

Average diversification

The 3 months correlation between TDK and Gateway is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding TDK Corp. and Gateway Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gateway Real Estate and TDK 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 TDK Corporation are associated (or correlated) with Gateway Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gateway Real Estate has no effect on the direction of TDK i.e., TDK and Gateway Real go up and down completely randomly.

Pair Corralation between TDK and Gateway Real

Assuming the 90 days trading horizon TDK Corporation is expected to under-perform the Gateway Real. But the stock apears to be less risky and, when comparing its historical volatility, TDK Corporation is 11.41 times less risky than Gateway Real. The stock trades about -0.15 of its potential returns per unit of risk. The Gateway Real Estate is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  43.00  in Gateway Real Estate on December 20, 2024 and sell it today you would lose (18.00) from holding Gateway Real Estate or give up 41.86% of portfolio value over 90 days.

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

TDK Corp.  vs.  Gateway Real Estate

TDK Corporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days TDK Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward-looking signals remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Gateway Real Estate

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gateway Real Estate are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Gateway Real reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TDK and Gateway Real

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

The idea behind TDK Corporation and Gateway Real Estate 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.