Correlation Between TK Chemical and Shinhan Inverse

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

By analyzing existing cross correlation between TK Chemical and Shinhan Inverse Silver, you can compare the effects of market volatilities on TK Chemical and Shinhan Inverse 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 Shinhan Inverse. Check out your portfolio center. Please also check ongoing floating volatility patterns of TK Chemical and Shinhan Inverse.

Diversification Opportunities for TK Chemical and Shinhan Inverse

-0.39

Correlation Coefficient

TK Chemical  Shinhan Inverse

Very good diversification

The 3 months correlation between 104480 and Shinhan is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding TK Chemical and Shinhan Inverse Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Inverse Silver 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 Shinhan Inverse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan Inverse Silver has no effect on the direction of TK Chemical i.e., TK Chemical and Shinhan Inverse go up and down completely randomly.

Pair Corralation between TK Chemical and Shinhan Inverse

Assuming the 90 days trading horizon TK Chemical is expected to generate 1.44 times less return on investment than Shinhan Inverse. But when comparing it to its historical volatility, TK Chemical is 1.27 times less risky than Shinhan Inverse. It trades about 0.04 of its potential returns per unit of risk. Shinhan Inverse Silver is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  353,000  in Shinhan Inverse Silver on September 21, 2024 and sell it today you would earn a total of  17,500  from holding Shinhan Inverse Silver or generate 4.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

TK Chemical  vs.  Shinhan Inverse Silver

TK Chemical

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TK Chemical are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Shinhan Inverse Silver

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shinhan Inverse Silver are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shinhan Inverse may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with TK Chemical and Shinhan Inverse

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

The idea behind TK Chemical and Shinhan Inverse Silver 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.