Correlation Between Phoenix Materials and Korea Petro
Can any of the company-specific risk be diversified away by investing in both Phoenix Materials and Korea Petro 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 Phoenix Materials and Korea Petro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Phoenix Materials Co and Korea Petro Chemical, you can compare the effects of market volatilities on Phoenix Materials and Korea Petro 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 Phoenix Materials with a short position of Korea Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phoenix Materials and Korea Petro.
Diversification Opportunities for Phoenix Materials and Korea Petro
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Phoenix and Korea is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Phoenix Materials Co and Korea Petro Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Petro Chemical and Phoenix Materials 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 Phoenix Materials Co are associated (or correlated) with Korea Petro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Petro Chemical has no effect on the direction of Phoenix Materials i.e., Phoenix Materials and Korea Petro go up and down completely randomly.
Pair Corralation between Phoenix Materials and Korea Petro
Assuming the 90 days trading horizon Phoenix Materials is expected to generate 2.35 times less return on investment than Korea Petro. In addition to that, Phoenix Materials is 2.88 times more volatile than Korea Petro Chemical. It trades about 0.04 of its total potential returns per unit of risk. Korea Petro Chemical is currently generating about 0.24 per unit of volatility. If you would invest 8,120,000 in Korea Petro Chemical on November 4, 2024 and sell it today you would earn a total of 990,000 from holding Korea Petro Chemical or generate 12.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Phoenix Materials Co vs. Korea Petro Chemical
Performance |
| Timeline |
| Phoenix Materials |
| Korea Petro Chemical |
Phoenix Materials and Korea Petro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Phoenix Materials and Korea Petro
The main advantage of trading using opposite Phoenix Materials and Korea Petro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phoenix Materials position performs unexpectedly, Korea Petro 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 Korea Petro will offset losses from the drop in Korea Petro's long position.| Phoenix Materials vs. Samsung Electronics Co | Phoenix Materials vs. Samsung Electronics Co | Phoenix Materials vs. Hyundai Motor Co | Phoenix Materials vs. Hyundai Motor |
| Korea Petro vs. Samyoung Electronics Co | Korea Petro vs. Daewoo Electronic Components | Korea Petro vs. Guyoung Technology Co | Korea Petro vs. Seers Technology |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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