Correlation Between Pyung Hwa and Sung Bo
Can any of the company-specific risk be diversified away by investing in both Pyung Hwa and Sung Bo 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 Pyung Hwa and Sung Bo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pyung Hwa Industrial and Sung Bo Chemicals, you can compare the effects of market volatilities on Pyung Hwa and Sung Bo 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 Pyung Hwa with a short position of Sung Bo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pyung Hwa and Sung Bo.
Diversification Opportunities for Pyung Hwa and Sung Bo
Very weak diversification
The 3 months correlation between Pyung and Sung is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Pyung Hwa Industrial and Sung Bo Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sung Bo Chemicals and Pyung Hwa 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 Pyung Hwa Industrial are associated (or correlated) with Sung Bo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sung Bo Chemicals has no effect on the direction of Pyung Hwa i.e., Pyung Hwa and Sung Bo go up and down completely randomly.
Pair Corralation between Pyung Hwa and Sung Bo
Assuming the 90 days trading horizon Pyung Hwa Industrial is expected to generate 1.75 times more return on investment than Sung Bo. However, Pyung Hwa is 1.75 times more volatile than Sung Bo Chemicals. It trades about 0.01 of its potential returns per unit of risk. Sung Bo Chemicals is currently generating about -0.01 per unit of risk. If you would invest 127,900 in Pyung Hwa Industrial on October 29, 2024 and sell it today you would lose (300.00) from holding Pyung Hwa Industrial or give up 0.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pyung Hwa Industrial vs. Sung Bo Chemicals
Performance |
| Timeline |
| Pyung Hwa Industrial |
| Sung Bo Chemicals |
Pyung Hwa and Sung Bo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pyung Hwa and Sung Bo
The main advantage of trading using opposite Pyung Hwa and Sung Bo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pyung Hwa position performs unexpectedly, Sung Bo 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 Sung Bo will offset losses from the drop in Sung Bo's long position.| Pyung Hwa vs. KB Financial Group | Pyung Hwa vs. Shinhan Financial Group | Pyung Hwa vs. Hana Financial | Pyung Hwa vs. Woori Financial Group |
| Sung Bo vs. KB Financial Group | Sung Bo vs. Shinhan Financial Group | Sung Bo vs. Hana Financial | Sung Bo vs. Woori Financial Group |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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