Correlation Between TDK and Corning Incorporated

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

By analyzing existing cross correlation between TDK Corporation and Corning Incorporated, you can compare the effects of market volatilities on TDK and Corning Incorporated 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 Corning Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of TDK and Corning Incorporated.

Diversification Opportunities for TDK and Corning Incorporated

0.43

Correlation Coefficient

TDK  Corning Incorporated

Very weak diversification

The 3 months correlation between TDK and Corning is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding TDK Corp. and Corning Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corning Incorporated 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 Corning Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corning Incorporated has no effect on the direction of TDK i.e., TDK and Corning Incorporated go up and down completely randomly.

Pair Corralation between TDK and Corning Incorporated

Assuming the 90 days horizon TDK Corporation is expected to under-perform the Corning Incorporated. But the stock apears to be less risky and, when comparing its historical volatility, TDK Corporation is 1.08 times less risky than Corning Incorporated. The stock trades about -0.16 of its potential returns per unit of risk. The Corning Incorporated is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  4,530  in Corning Incorporated on December 29, 2024 and sell it today you would lose (159.00) from holding Corning Incorporated or give up 3.51% of portfolio value over 90 days.

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

TDK Corp.  vs.  Corning Incorporated

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. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Corning Incorporated

Risk-Adjusted Performance

Very Weak

Over the last 90 days Corning Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Corning Incorporated is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TDK and Corning Incorporated

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

The idea behind TDK Corporation and Corning Incorporated 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.