Correlation Between Pyung Hwa and LEADCORP
Can any of the company-specific risk be diversified away by investing in both Pyung Hwa and LEADCORP 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 LEADCORP 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 The LEADCORP, you can compare the effects of market volatilities on Pyung Hwa and LEADCORP 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 LEADCORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pyung Hwa and LEADCORP.
Diversification Opportunities for Pyung Hwa and LEADCORP
Very poor diversification
The 3 months correlation between Pyung and LEADCORP is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Pyung Hwa Industrial and The LEADCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEADCORP 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 LEADCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEADCORP has no effect on the direction of Pyung Hwa i.e., Pyung Hwa and LEADCORP go up and down completely randomly.
Pair Corralation between Pyung Hwa and LEADCORP
Assuming the 90 days trading horizon Pyung Hwa Industrial is expected to under-perform the LEADCORP. In addition to that, Pyung Hwa is 1.51 times more volatile than The LEADCORP. It trades about -0.09 of its total potential returns per unit of risk. The LEADCORP is currently generating about -0.11 per unit of volatility. If you would invest 514,000 in The LEADCORP on September 14, 2024 and sell it today you would lose (95,500) from holding The LEADCORP or give up 18.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pyung Hwa Industrial vs. The LEADCORP
Performance |
| Timeline |
| Pyung Hwa Industrial |
| LEADCORP |
Pyung Hwa and LEADCORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pyung Hwa and LEADCORP
The main advantage of trading using opposite Pyung Hwa and LEADCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pyung Hwa position performs unexpectedly, LEADCORP 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 LEADCORP will offset losses from the drop in LEADCORP's long position.| Pyung Hwa vs. Samsung Electronics Co | Pyung Hwa vs. Samsung Electronics Co | Pyung Hwa vs. SK Hynix | Pyung Hwa vs. POSCO Holdings |
| LEADCORP vs. LG Chemicals | LEADCORP vs. Hannong Chemicals | LEADCORP vs. Seoul Food Industrial | LEADCORP vs. Pyung Hwa Industrial |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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