Correlation Between Microfriend and Pyung Hwa
Can any of the company-specific risk be diversified away by investing in both Microfriend and Pyung Hwa 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 Microfriend and Pyung Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microfriend and Pyung Hwa Industrial, you can compare the effects of market volatilities on Microfriend and Pyung Hwa 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 Microfriend with a short position of Pyung Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microfriend and Pyung Hwa.
Diversification Opportunities for Microfriend and Pyung Hwa
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microfriend and Pyung is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Microfriend and Pyung Hwa Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pyung Hwa Industrial and Microfriend 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 Microfriend are associated (or correlated) with Pyung Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pyung Hwa Industrial has no effect on the direction of Microfriend i.e., Microfriend and Pyung Hwa go up and down completely randomly.
Pair Corralation between Microfriend and Pyung Hwa
Assuming the 90 days trading horizon Microfriend is expected to under-perform the Pyung Hwa. In addition to that, Microfriend is 2.81 times more volatile than Pyung Hwa Industrial. It trades about -0.25 of its total potential returns per unit of risk. Pyung Hwa Industrial is currently generating about -0.18 per unit of volatility. If you would invest 97,600 in Pyung Hwa Industrial on August 28, 2024 and sell it today you would lose (6,200) from holding Pyung Hwa Industrial or give up 6.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microfriend vs. Pyung Hwa Industrial
Performance |
| Timeline |
| Microfriend |
| Pyung Hwa Industrial |
Microfriend and Pyung Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microfriend and Pyung Hwa
The main advantage of trading using opposite Microfriend and Pyung Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microfriend position performs unexpectedly, Pyung Hwa 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 Pyung Hwa will offset losses from the drop in Pyung Hwa's long position.| Microfriend vs. SK Hynix | Microfriend vs. People Technology | Microfriend vs. SIMMTECH Co | Microfriend vs. Haesung DS Co |
| Pyung Hwa vs. AptaBio Therapeutics | Pyung Hwa vs. Daewoo SBI SPAC | Pyung Hwa vs. Dream Security co | Pyung Hwa vs. Microfriend |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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