Correlation Between Microfriend and PI Advanced
Can any of the company-specific risk be diversified away by investing in both Microfriend and PI Advanced 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 PI Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microfriend and PI Advanced Materials, you can compare the effects of market volatilities on Microfriend and PI Advanced 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 PI Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microfriend and PI Advanced.
Diversification Opportunities for Microfriend and PI Advanced
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microfriend and 178920 is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Microfriend and PI Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PI Advanced Materials 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 PI Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PI Advanced Materials has no effect on the direction of Microfriend i.e., Microfriend and PI Advanced go up and down completely randomly.
Pair Corralation between Microfriend and PI Advanced
Assuming the 90 days trading horizon Microfriend is expected to generate 1.35 times more return on investment than PI Advanced. However, Microfriend is 1.35 times more volatile than PI Advanced Materials. It trades about -0.03 of its potential returns per unit of risk. PI Advanced Materials is currently generating about -0.06 per unit of risk. If you would invest 518,000 in Microfriend on September 4, 2024 and sell it today you would lose (223,000) from holding Microfriend or give up 43.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microfriend vs. PI Advanced Materials
Performance |
| Timeline |
| Microfriend |
| PI Advanced Materials |
Microfriend and PI Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microfriend and PI Advanced
The main advantage of trading using opposite Microfriend and PI Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microfriend position performs unexpectedly, PI Advanced 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 PI Advanced will offset losses from the drop in PI Advanced's long position.| Microfriend vs. PI Advanced Materials | Microfriend vs. Lake Materials Co | Microfriend vs. Hyosung Advanced Materials | Microfriend vs. Stic Investments |
| PI Advanced vs. Samsung Electronics Co | PI Advanced vs. Samsung Electronics Co | PI Advanced vs. LG Energy Solution | PI Advanced 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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