Correlation Between Iljin Materials and Coloray International
Can any of the company-specific risk be diversified away by investing in both Iljin Materials and Coloray International 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 Iljin Materials and Coloray International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iljin Materials Co and Coloray International Investment, you can compare the effects of market volatilities on Iljin Materials and Coloray International 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 Iljin Materials with a short position of Coloray International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iljin Materials and Coloray International.
Diversification Opportunities for Iljin Materials and Coloray International
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Iljin and Coloray is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Iljin Materials Co and Coloray International Investme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coloray International and Iljin Materials 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 Iljin Materials Co are associated (or correlated) with Coloray International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coloray International has no effect on the direction of Iljin Materials i.e., Iljin Materials and Coloray International go up and down completely randomly.
Pair Corralation between Iljin Materials and Coloray International
Assuming the 90 days trading horizon Iljin Materials Co is expected to under-perform the Coloray International. In addition to that, Iljin Materials is 1.2 times more volatile than Coloray International Investment. It trades about -0.22 of its total potential returns per unit of risk. Coloray International Investment is currently generating about -0.07 per unit of volatility. If you would invest 69,000 in Coloray International Investment on September 26, 2024 and sell it today you would lose (10,500) from holding Coloray International Investment or give up 15.22% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Iljin Materials Co vs. Coloray International Investme
Performance |
Timeline |
Iljin Materials |
Coloray International |
Iljin Materials and Coloray International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Iljin Materials and Coloray International
The main advantage of trading using opposite Iljin Materials and Coloray International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iljin Materials position performs unexpectedly, Coloray International 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 Coloray International will offset losses from the drop in Coloray International's long position.Iljin Materials vs. Samsung Electronics Co | Iljin Materials vs. Samsung Electronics Co | Iljin Materials vs. LG Energy Solution | Iljin Materials vs. SK Hynix |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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