Correlation Between TOPMATERIAL and Coloray International

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

By analyzing existing cross correlation between TOPMATERIAL LTD and Coloray International Investment, you can compare the effects of market volatilities on TOPMATERIAL 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 TOPMATERIAL with a short position of Coloray International. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOPMATERIAL and Coloray International.

Diversification Opportunities for TOPMATERIAL and Coloray International

0.91

Correlation Coefficient

TOPMATERIAL  Coloray International

Almost no diversification

The 3 months correlation between TOPMATERIAL and Coloray is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding TOPMATERIAL LTD and Coloray International Investme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coloray International and TOPMATERIAL 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 TOPMATERIAL LTD 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 TOPMATERIAL i.e., TOPMATERIAL and Coloray International go up and down completely randomly.

Pair Corralation between TOPMATERIAL and Coloray International

Assuming the 90 days trading horizon TOPMATERIAL LTD is expected to under-perform the Coloray International. In addition to that, TOPMATERIAL is 1.13 times more volatile than Coloray International Investment. It trades about -0.17 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	Very Strong
Accuracy	100.0%
Values	Daily Returns

TOPMATERIAL LTD  vs.  Coloray International Investme

TOPMATERIAL LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TOPMATERIAL LTD 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Coloray International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coloray International Investment 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with TOPMATERIAL and Coloray International

The main advantage of trading using opposite TOPMATERIAL and Coloray International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOPMATERIAL 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.

The idea behind TOPMATERIAL LTD and Coloray International Investment 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.