Correlation Between Phoenix Materials and Korea Information
Can any of the company-specific risk be diversified away by investing in both Phoenix Materials and Korea Information 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 Information 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 Information Engineering, you can compare the effects of market volatilities on Phoenix Materials and Korea Information 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 Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phoenix Materials and Korea Information.
Diversification Opportunities for Phoenix Materials and Korea Information
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Phoenix and Korea is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Phoenix Materials Co and Korea Information Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Information 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 Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Information has no effect on the direction of Phoenix Materials i.e., Phoenix Materials and Korea Information go up and down completely randomly.
Pair Corralation between Phoenix Materials and Korea Information
Assuming the 90 days trading horizon Phoenix Materials Co is expected to under-perform the Korea Information. In addition to that, Phoenix Materials is 2.47 times more volatile than Korea Information Engineering. It trades about -0.02 of its total potential returns per unit of risk. Korea Information Engineering is currently generating about -0.03 per unit of volatility. If you would invest 297,500 in Korea Information Engineering on October 17, 2024 and sell it today you would lose (35,500) from holding Korea Information Engineering or give up 11.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.29% |
| Values | Daily Returns |
Phoenix Materials Co vs. Korea Information Engineering
Performance |
| Timeline |
| Phoenix Materials |
| Korea Information |
Phoenix Materials and Korea Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Phoenix Materials and Korea Information
The main advantage of trading using opposite Phoenix Materials and Korea Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phoenix Materials position performs unexpectedly, Korea Information 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 Information will offset losses from the drop in Korea Information's long position.| Phoenix Materials vs. Myoung Shin Industrial | Phoenix Materials vs. PJ Metal Co | Phoenix Materials vs. LEENO Industrial | Phoenix Materials vs. Daesung Industrial Co |
| Korea Information vs. Top Material Co | Korea Information vs. Phoenix Materials Co | Korea Information vs. Ecoplastic | Korea Information vs. Yura Tech 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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