Correlation Between Korea Shipbuilding and Pyung Hwa
Can any of the company-specific risk be diversified away by investing in both Korea Shipbuilding and Pyung Hwa 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 Korea Shipbuilding and Pyung Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Shipbuilding Offshore and Pyung Hwa Industrial, you can compare the effects of market volatilities on Korea Shipbuilding and Pyung Hwa 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 Korea Shipbuilding with a short position of Pyung Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Shipbuilding and Pyung Hwa.
Diversification Opportunities for Korea Shipbuilding and Pyung Hwa
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Korea and Pyung is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Korea Shipbuilding Offshore and Pyung Hwa Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pyung Hwa Industrial and Korea Shipbuilding 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 Korea Shipbuilding Offshore are associated (or correlated) with Pyung Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pyung Hwa Industrial has no effect on the direction of Korea Shipbuilding i.e., Korea Shipbuilding and Pyung Hwa go up and down completely randomly.
Pair Corralation between Korea Shipbuilding and Pyung Hwa
Assuming the 90 days trading horizon Korea Shipbuilding is expected to generate 3.15 times less return on investment than Pyung Hwa. But when comparing it to its historical volatility, Korea Shipbuilding Offshore is 1.95 times less risky than Pyung Hwa. It trades about 0.11 of its potential returns per unit of risk. Pyung Hwa Industrial is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 90,300 in Pyung Hwa Industrial on October 30, 2024 and sell it today you would earn a total of 37,300 from holding Pyung Hwa Industrial or generate 41.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Shipbuilding Offshore vs. Pyung Hwa Industrial
Performance |
| Timeline |
| Korea Shipbuilding |
| Pyung Hwa Industrial |
Korea Shipbuilding and Pyung Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Shipbuilding and Pyung Hwa
The main advantage of trading using opposite Korea Shipbuilding and Pyung Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Shipbuilding position performs unexpectedly, Pyung Hwa 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 Pyung Hwa will offset losses from the drop in Pyung Hwa's long position.| Korea Shipbuilding vs. DB Financial Investment | Korea Shipbuilding vs. Daol Investment Securities | Korea Shipbuilding vs. ABOV Semiconductor Co | Korea Shipbuilding vs. Mgame Corp |
| Pyung Hwa vs. Sam Yang Foods | Pyung Hwa vs. Seoul Food Industrial | Pyung Hwa vs. FOODWELL Co | Pyung Hwa vs. Korea Electronic Certification |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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