Correlation Between Cheryong Industrial and PH Tech
Can any of the company-specific risk be diversified away by investing in both Cheryong Industrial and PH Tech 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 Cheryong Industrial and PH Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheryong Industrial CoLtd and PH Tech Co, you can compare the effects of market volatilities on Cheryong Industrial and PH Tech 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 Cheryong Industrial with a short position of PH Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheryong Industrial and PH Tech.
Diversification Opportunities for Cheryong Industrial and PH Tech
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cheryong and 239890 is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Cheryong Industrial CoLtd and PH Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PH Tech and Cheryong Industrial 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 Cheryong Industrial CoLtd are associated (or correlated) with PH Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PH Tech has no effect on the direction of Cheryong Industrial i.e., Cheryong Industrial and PH Tech go up and down completely randomly.
Pair Corralation between Cheryong Industrial and PH Tech
Assuming the 90 days trading horizon Cheryong Industrial is expected to generate 2.5 times less return on investment than PH Tech. But when comparing it to its historical volatility, Cheryong Industrial CoLtd is 1.35 times less risky than PH Tech. It trades about 0.06 of its potential returns per unit of risk. PH Tech Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 700,000 in PH Tech Co on September 21, 2024 and sell it today you would earn a total of 73,000 from holding PH Tech Co or generate 10.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheryong Industrial CoLtd vs. PH Tech Co
Performance |
| Timeline |
| Cheryong Industrial CoLtd |
| PH Tech |
Cheryong Industrial and PH Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheryong Industrial and PH Tech
The main advantage of trading using opposite Cheryong Industrial and PH Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheryong Industrial position performs unexpectedly, PH Tech 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 PH Tech will offset losses from the drop in PH Tech's long position.The idea behind Cheryong Industrial CoLtd and PH Tech Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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