Correlation Between Poongsan and RPBio
Can any of the company-specific risk be diversified away by investing in both Poongsan and RPBio 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 Poongsan and RPBio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Poongsan and RPBio Inc, you can compare the effects of market volatilities on Poongsan and RPBio 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 Poongsan with a short position of RPBio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Poongsan and RPBio.
Diversification Opportunities for Poongsan and RPBio
Poor diversification
The 3 months correlation between Poongsan and RPBio is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Poongsan and RPBio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RPBio Inc and Poongsan 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 Poongsan are associated (or correlated) with RPBio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RPBio Inc has no effect on the direction of Poongsan i.e., Poongsan and RPBio go up and down completely randomly.
Pair Corralation between Poongsan and RPBio
Assuming the 90 days trading horizon Poongsan is expected to under-perform the RPBio. In addition to that, Poongsan is 1.4 times more volatile than RPBio Inc. It trades about -0.09 of its total potential returns per unit of risk. RPBio Inc is currently generating about -0.07 per unit of volatility. If you would invest 554,000 in RPBio Inc on September 25, 2024 and sell it today you would lose (26,000) from holding RPBio Inc or give up 4.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Poongsan vs. RPBio Inc
Performance |
| Timeline |
| Poongsan |
| RPBio Inc |
Poongsan and RPBio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Poongsan and RPBio
The main advantage of trading using opposite Poongsan and RPBio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Poongsan position performs unexpectedly, RPBio 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 RPBio will offset losses from the drop in RPBio's long position.| Poongsan vs. LG Chemicals | Poongsan vs. POSCO Holdings | Poongsan vs. Hanwha Solutions | Poongsan vs. Lotte Chemical Corp |
| RPBio vs. Samsung Electronics Co | RPBio vs. Samsung Electronics Co | RPBio vs. LG Energy Solution | RPBio vs. SK Hynix |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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