Correlation Between Taeyang Metal and HyVision System

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

By analyzing existing cross correlation between Taeyang Metal Industrial and HyVision System, you can compare the effects of market volatilities on Taeyang Metal and HyVision System 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 Taeyang Metal with a short position of HyVision System. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taeyang Metal and HyVision System.

Diversification Opportunities for Taeyang Metal and HyVision System

0.11

Correlation Coefficient

Taeyang Metal  HyVision System

Average diversification

The 3 months correlation between Taeyang and HyVision is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Taeyang Metal Industrial and HyVision System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HyVision System and Taeyang Metal 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 Taeyang Metal Industrial are associated (or correlated) with HyVision System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HyVision System has no effect on the direction of Taeyang Metal i.e., Taeyang Metal and HyVision System go up and down completely randomly.

Pair Corralation between Taeyang Metal and HyVision System

Assuming the 90 days trading horizon Taeyang Metal Industrial is expected to generate 1.59 times more return on investment than HyVision System. However, Taeyang Metal is 1.59 times more volatile than HyVision System. It trades about 0.05 of its potential returns per unit of risk. HyVision System is currently generating about 0.01 per unit of risk. If you would invest  465,000  in Taeyang Metal Industrial on September 13, 2024 and sell it today you would earn a total of  33,500  from holding Taeyang Metal Industrial or generate 7.2% return on investment over 90 days.

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

Taeyang Metal Industrial  vs.  HyVision System

Taeyang Metal Industrial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Taeyang Metal Industrial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Taeyang Metal sustained solid returns over the last few months and may actually be approaching a breakup point.

HyVision System

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HyVision System are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, HyVision System is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Taeyang Metal and HyVision System

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

The idea behind Taeyang Metal Industrial and HyVision System 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.