Correlation Between Pyung Hwa and Korean Drug
Can any of the company-specific risk be diversified away by investing in both Pyung Hwa and Korean Drug 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 Korean Drug 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 Korean Drug Co, you can compare the effects of market volatilities on Pyung Hwa and Korean Drug 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 Korean Drug. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pyung Hwa and Korean Drug.
Diversification Opportunities for Pyung Hwa and Korean Drug
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pyung and Korean is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Pyung Hwa Industrial and Korean Drug Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Drug 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 Korean Drug. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Drug has no effect on the direction of Pyung Hwa i.e., Pyung Hwa and Korean Drug go up and down completely randomly.
Pair Corralation between Pyung Hwa and Korean Drug
Assuming the 90 days trading horizon Pyung Hwa Industrial is expected to under-perform the Korean Drug. But the stock apears to be less risky and, when comparing its historical volatility, Pyung Hwa Industrial is 1.11 times less risky than Korean Drug. The stock trades about -0.1 of its potential returns per unit of risk. The Korean Drug Co is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 654,013 in Korean Drug Co on September 2, 2024 and sell it today you would lose (198,013) from holding Korean Drug Co or give up 30.28% 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. Korean Drug Co
Performance |
| Timeline |
| Pyung Hwa Industrial |
| Korean Drug |
Pyung Hwa and Korean Drug Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pyung Hwa and Korean Drug
The main advantage of trading using opposite Pyung Hwa and Korean Drug positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pyung Hwa position performs unexpectedly, Korean Drug 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 Korean Drug will offset losses from the drop in Korean Drug's long position.| Pyung Hwa vs. AptaBio Therapeutics | Pyung Hwa vs. Daewoo SBI SPAC | Pyung Hwa vs. Dream Security co | Pyung Hwa vs. Microfriend |
| Korean Drug vs. Nable Communications | Korean Drug vs. Daishin Information Communications | Korean Drug vs. Seoul Electronics Telecom | Korean Drug vs. Samick Musical Instruments |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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