Correlation Between PI Advanced and Seoul Electronics
Can any of the company-specific risk be diversified away by investing in both PI Advanced and Seoul Electronics 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 Seoul Electronics 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 Seoul Electronics Telecom, you can compare the effects of market volatilities on PI Advanced and Seoul Electronics 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 Seoul Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of PI Advanced and Seoul Electronics.
Diversification Opportunities for PI Advanced and Seoul Electronics
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 178920 and Seoul is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding PI Advanced Materials and Seoul Electronics Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Electronics Telecom 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 Seoul Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Electronics Telecom has no effect on the direction of PI Advanced i.e., PI Advanced and Seoul Electronics go up and down completely randomly.
Pair Corralation between PI Advanced and Seoul Electronics
Assuming the 90 days trading horizon PI Advanced Materials is expected to generate 1.12 times more return on investment than Seoul Electronics. However, PI Advanced is 1.12 times more volatile than Seoul Electronics Telecom. It trades about 0.08 of its potential returns per unit of risk. Seoul Electronics Telecom is currently generating about 0.0 per unit of risk. If you would invest 1,641,000 in PI Advanced Materials on October 30, 2024 and sell it today you would earn a total of 147,000 from holding PI Advanced Materials or generate 8.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PI Advanced Materials vs. Seoul Electronics Telecom
Performance |
| Timeline |
| PI Advanced Materials |
| Seoul Electronics Telecom |
PI Advanced and Seoul Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PI Advanced and Seoul Electronics
The main advantage of trading using opposite PI Advanced and Seoul Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PI Advanced position performs unexpectedly, Seoul Electronics 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 Seoul Electronics will offset losses from the drop in Seoul Electronics' long position.| PI Advanced vs. Daejoo Electronic Materials | PI Advanced vs. INFINITT Healthcare Co | PI Advanced vs. Lake Materials Co | PI Advanced vs. LS Materials |
| Seoul Electronics vs. Jinro Distillers Co | Seoul Electronics vs. Korea Alcohol Industrial | Seoul Electronics vs. Ssangyong Information Communication | Seoul Electronics vs. Green Cross Medical |
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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