Correlation Between Phoenix Materials and Namhae Chemical
Can any of the company-specific risk be diversified away by investing in both Phoenix Materials and Namhae 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 Namhae 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 Namhae Chemical, you can compare the effects of market volatilities on Phoenix Materials and Namhae 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 Namhae Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phoenix Materials and Namhae Chemical.
Diversification Opportunities for Phoenix Materials and Namhae Chemical
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Phoenix and Namhae is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Phoenix Materials Co and Namhae Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhae 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 Namhae Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhae Chemical has no effect on the direction of Phoenix Materials i.e., Phoenix Materials and Namhae Chemical go up and down completely randomly.
Pair Corralation between Phoenix Materials and Namhae Chemical
Assuming the 90 days trading horizon Phoenix Materials Co is expected to under-perform the Namhae Chemical. In addition to that, Phoenix Materials is 2.94 times more volatile than Namhae Chemical. It trades about -0.3 of its total potential returns per unit of risk. Namhae Chemical is currently generating about -0.1 per unit of volatility. If you would invest 641,000 in Namhae Chemical on August 28, 2024 and sell it today you would lose (14,000) from holding Namhae Chemical or give up 2.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Phoenix Materials Co vs. Namhae Chemical
Performance |
| Timeline |
| Phoenix Materials |
| Namhae Chemical |
Phoenix Materials and Namhae Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Phoenix Materials and Namhae Chemical
The main advantage of trading using opposite Phoenix Materials and Namhae Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phoenix Materials position performs unexpectedly, Namhae 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 Namhae Chemical will offset losses from the drop in Namhae Chemical's long position.| Phoenix Materials vs. Namhae Chemical | Phoenix Materials vs. Seoul Electronics Telecom | Phoenix Materials vs. Sunny Electronics Corp | Phoenix Materials vs. Sungwoo Electronics Co |
| Namhae Chemical vs. LG Chemicals | Namhae Chemical vs. Lotte Chemical Corp | Namhae Chemical vs. Hyundai Steel | Namhae Chemical vs. Seah Steel Corp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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