Correlation Between TK Chemical and Daishin Information

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

By analyzing existing cross correlation between TK Chemical and Daishin Information Communications, you can compare the effects of market volatilities on TK Chemical and Daishin Information 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 TK Chemical with a short position of Daishin Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of TK Chemical and Daishin Information.

Diversification Opportunities for TK Chemical and Daishin Information

0.21

Correlation Coefficient

TK Chemical  Daishin Information

Modest diversification

The 3 months correlation between 104480 and Daishin is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding TK Chemical and Daishin Information Communicat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daishin Information and TK Chemical 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 TK Chemical are associated (or correlated) with Daishin Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daishin Information has no effect on the direction of TK Chemical i.e., TK Chemical and Daishin Information go up and down completely randomly.

Pair Corralation between TK Chemical and Daishin Information

Assuming the 90 days trading horizon TK Chemical is expected to generate 16.81 times less return on investment than Daishin Information. But when comparing it to its historical volatility, TK Chemical is 1.25 times less risky than Daishin Information. It trades about 0.01 of its potential returns per unit of risk. Daishin Information Communications is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  88,600  in Daishin Information Communications on September 15, 2024 and sell it today you would earn a total of  16,900  from holding Daishin Information Communications or generate 19.07% return on investment over 90 days.

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

TK Chemical  vs.  Daishin Information Communicat

TK Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TK Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, TK Chemical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Daishin Information

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Daishin Information Communications are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daishin Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TK Chemical and Daishin Information

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

The idea behind TK Chemical and Daishin Information Communications 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.