Correlation Between PI Advanced and Korea Steel
Can any of the company-specific risk be diversified away by investing in both PI Advanced and Korea Steel 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 PI Advanced and Korea Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PI Advanced Materials and Korea Steel Co, you can compare the effects of market volatilities on PI Advanced and Korea Steel 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 PI Advanced with a short position of Korea Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of PI Advanced and Korea Steel.
Diversification Opportunities for PI Advanced and Korea Steel
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 178920 and Korea is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding PI Advanced Materials and Korea Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Steel and PI Advanced 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 PI Advanced Materials are associated (or correlated) with Korea Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Steel has no effect on the direction of PI Advanced i.e., PI Advanced and Korea Steel go up and down completely randomly.
Pair Corralation between PI Advanced and Korea Steel
Assuming the 90 days trading horizon PI Advanced Materials is expected to under-perform the Korea Steel. In addition to that, PI Advanced is 2.43 times more volatile than Korea Steel Co. It trades about -0.05 of its total potential returns per unit of risk. Korea Steel Co is currently generating about -0.07 per unit of volatility. If you would invest 202,500 in Korea Steel Co on September 4, 2024 and sell it today you would lose (62,300) from holding Korea Steel Co or give up 30.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PI Advanced Materials vs. Korea Steel Co
Performance |
| Timeline |
| PI Advanced Materials |
| Korea Steel |
PI Advanced and Korea Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PI Advanced and Korea Steel
The main advantage of trading using opposite PI Advanced and Korea Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PI Advanced position performs unexpectedly, Korea Steel 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 Korea Steel will offset losses from the drop in Korea Steel's long position.| PI Advanced vs. Samsung Electronics Co | PI Advanced vs. Samsung Electronics Co | PI Advanced vs. LG Energy Solution | PI Advanced vs. SK Hynix |
| Korea Steel vs. Seah Steel Corp | Korea Steel vs. Ni Steel | Korea Steel vs. Bookook Steel | Korea Steel vs. Finebesteel |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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