Correlation Between Hotel Shilla and Phoenix Materials
Can any of the company-specific risk be diversified away by investing in both Hotel Shilla and Phoenix Materials 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 Hotel Shilla and Phoenix Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hotel Shilla Co and Phoenix Materials Co, you can compare the effects of market volatilities on Hotel Shilla and Phoenix Materials 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 Hotel Shilla with a short position of Phoenix Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Shilla and Phoenix Materials.
Diversification Opportunities for Hotel Shilla and Phoenix Materials
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hotel and Phoenix is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Shilla Co and Phoenix Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Materials and Hotel Shilla 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 Hotel Shilla Co are associated (or correlated) with Phoenix Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix Materials has no effect on the direction of Hotel Shilla i.e., Hotel Shilla and Phoenix Materials go up and down completely randomly.
Pair Corralation between Hotel Shilla and Phoenix Materials
Assuming the 90 days trading horizon Hotel Shilla Co is expected to under-perform the Phoenix Materials. But the stock apears to be less risky and, when comparing its historical volatility, Hotel Shilla Co is 4.46 times less risky than Phoenix Materials. The stock trades about -0.13 of its potential returns per unit of risk. The Phoenix Materials Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 70,700 in Phoenix Materials Co on October 16, 2024 and sell it today you would earn a total of 2,600 from holding Phoenix Materials Co or generate 3.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hotel Shilla Co vs. Phoenix Materials Co
Performance |
| Timeline |
| Hotel Shilla |
| Phoenix Materials |
Hotel Shilla and Phoenix Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hotel Shilla and Phoenix Materials
The main advantage of trading using opposite Hotel Shilla and Phoenix Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotel Shilla position performs unexpectedly, Phoenix Materials 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 Phoenix Materials will offset losses from the drop in Phoenix Materials' long position.| Hotel Shilla vs. Hanwha Chemical Corp | Hotel Shilla vs. Organic Special Pet | Hotel Shilla vs. KPX Green Chemical | Hotel Shilla vs. CJ Seafood Corp |
| Phoenix Materials vs. KMH Hitech Co | Phoenix Materials vs. GemVaxKAEL CoLtd | Phoenix Materials vs. Bosung Power Technology | Phoenix Materials vs. Busan Industrial Co |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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