Correlation Between Phoenix Materials and Hyundai Engineering
Can any of the company-specific risk be diversified away by investing in both Phoenix Materials and Hyundai Engineering 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 Hyundai Engineering 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 Hyundai Engineering Plastics, you can compare the effects of market volatilities on Phoenix Materials and Hyundai Engineering 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 Hyundai Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phoenix Materials and Hyundai Engineering.
Diversification Opportunities for Phoenix Materials and Hyundai Engineering
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Phoenix and Hyundai is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Phoenix Materials Co and Hyundai Engineering Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Engineering 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 Hyundai Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Engineering has no effect on the direction of Phoenix Materials i.e., Phoenix Materials and Hyundai Engineering go up and down completely randomly.
Pair Corralation between Phoenix Materials and Hyundai Engineering
Assuming the 90 days trading horizon Phoenix Materials Co is expected to under-perform the Hyundai Engineering. In addition to that, Phoenix Materials is 2.59 times more volatile than Hyundai Engineering Plastics. It trades about -0.14 of its total potential returns per unit of risk. Hyundai Engineering Plastics is currently generating about -0.15 per unit of volatility. If you would invest 385,500 in Hyundai Engineering Plastics on September 1, 2024 and sell it today you would lose (21,500) from holding Hyundai Engineering Plastics or give up 5.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Phoenix Materials Co vs. Hyundai Engineering Plastics
Performance |
| Timeline |
| Phoenix Materials |
| Hyundai Engineering |
Phoenix Materials and Hyundai Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Phoenix Materials and Hyundai Engineering
The main advantage of trading using opposite Phoenix Materials and Hyundai Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phoenix Materials position performs unexpectedly, Hyundai Engineering 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 Hyundai Engineering will offset losses from the drop in Hyundai Engineering's long position.| Phoenix Materials vs. Dongsin Engineering Construction | Phoenix Materials vs. Doosan Fuel Cell | Phoenix Materials vs. Daishin Balance 1 | Phoenix Materials vs. Total Soft Bank |
| Hyundai Engineering vs. ABCO Electronics Co | Hyundai Engineering vs. Daiyang Metal Co | Hyundai Engineering vs. Daejung Chemicals Metals | Hyundai Engineering vs. DAEDUCK ELECTRONICS CoLtd |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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