Correlation Between Phoenix Materials and Daewon Chemical
Can any of the company-specific risk be diversified away by investing in both Phoenix Materials and Daewon Chemical 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 Daewon Chemical 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 Daewon Chemical Co, you can compare the effects of market volatilities on Phoenix Materials and Daewon Chemical 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 Daewon Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phoenix Materials and Daewon Chemical.
Diversification Opportunities for Phoenix Materials and Daewon Chemical
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Phoenix and Daewon is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Phoenix Materials Co and Daewon Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewon 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 Daewon Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewon Chemical has no effect on the direction of Phoenix Materials i.e., Phoenix Materials and Daewon Chemical go up and down completely randomly.
Pair Corralation between Phoenix Materials and Daewon Chemical
Assuming the 90 days trading horizon Phoenix Materials Co is expected to under-perform the Daewon Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Phoenix Materials Co is 1.91 times less risky than Daewon Chemical. The stock trades about -0.09 of its potential returns per unit of risk. The Daewon Chemical Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 106,500 in Daewon Chemical Co on September 3, 2024 and sell it today you would earn a total of 8,700 from holding Daewon Chemical Co or generate 8.17% 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. Daewon Chemical Co
Performance |
| Timeline |
| Phoenix Materials |
| Daewon Chemical |
Phoenix Materials and Daewon Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Phoenix Materials and Daewon Chemical
The main advantage of trading using opposite Phoenix Materials and Daewon Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phoenix Materials position performs unexpectedly, Daewon Chemical 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 Daewon Chemical will offset losses from the drop in Daewon Chemical's long position.| Phoenix Materials vs. Pan Entertainment Co | Phoenix Materials vs. Jeong Moon Information | Phoenix Materials vs. Digital Multimedia Technology | Phoenix Materials vs. Lotte Data Communication |
| Daewon Chemical vs. Daejoo Electronic Materials | Daewon Chemical vs. Phoenix Materials Co | Daewon Chemical vs. INNOX Advanced Materials | Daewon Chemical vs. Lotte Energy Materials |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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