Correlation Between InnoTherapy and Seoyon Topmetal

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

By analyzing existing cross correlation between InnoTherapy and Seoyon Topmetal Co, you can compare the effects of market volatilities on InnoTherapy and Seoyon Topmetal 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 InnoTherapy with a short position of Seoyon Topmetal. Check out your portfolio center. Please also check ongoing floating volatility patterns of InnoTherapy and Seoyon Topmetal.

Diversification Opportunities for InnoTherapy and Seoyon Topmetal

0.25

Correlation Coefficient

InnoTherapy  Seoyon Topmetal

Modest diversification

The 3 months correlation between InnoTherapy and Seoyon is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding InnoTherapy and Seoyon Topmetal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoyon Topmetal and InnoTherapy 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 InnoTherapy are associated (or correlated) with Seoyon Topmetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoyon Topmetal has no effect on the direction of InnoTherapy i.e., InnoTherapy and Seoyon Topmetal go up and down completely randomly.

Pair Corralation between InnoTherapy and Seoyon Topmetal

Assuming the 90 days trading horizon InnoTherapy is expected to under-perform the Seoyon Topmetal. But the stock apears to be less risky and, when comparing its historical volatility, InnoTherapy is 1.19 times less risky than Seoyon Topmetal. The stock trades about -0.14 of its potential returns per unit of risk. The Seoyon Topmetal Co is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  406,000  in Seoyon Topmetal Co on September 1, 2024 and sell it today you would lose (40,000) from holding Seoyon Topmetal Co or give up 9.85% of portfolio value over 90 days.

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

InnoTherapy  vs.  Seoyon Topmetal Co

InnoTherapy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days InnoTherapy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Seoyon Topmetal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seoyon Topmetal Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with InnoTherapy and Seoyon Topmetal

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

The idea behind InnoTherapy and Seoyon Topmetal Co 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.