Correlation Between PI Advanced and Daewoo Engineering
Can any of the company-specific risk be diversified away by investing in both PI Advanced and Daewoo Engineering 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 Daewoo Engineering 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 Daewoo Engineering Construction, you can compare the effects of market volatilities on PI Advanced and Daewoo Engineering 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 Daewoo Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of PI Advanced and Daewoo Engineering.
Diversification Opportunities for PI Advanced and Daewoo Engineering
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 178920 and Daewoo is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding PI Advanced Materials and Daewoo Engineering Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewoo Engineering 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 Daewoo Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewoo Engineering has no effect on the direction of PI Advanced i.e., PI Advanced and Daewoo Engineering go up and down completely randomly.
Pair Corralation between PI Advanced and Daewoo Engineering
Assuming the 90 days trading horizon PI Advanced Materials is expected to under-perform the Daewoo Engineering. In addition to that, PI Advanced is 1.87 times more volatile than Daewoo Engineering Construction. It trades about -0.2 of its total potential returns per unit of risk. Daewoo Engineering Construction is currently generating about -0.06 per unit of volatility. If you would invest 403,000 in Daewoo Engineering Construction on August 30, 2024 and sell it today you would lose (28,500) from holding Daewoo Engineering Construction or give up 7.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PI Advanced Materials vs. Daewoo Engineering Constructio
Performance |
| Timeline |
| PI Advanced Materials |
| Daewoo Engineering |
PI Advanced and Daewoo Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PI Advanced and Daewoo Engineering
The main advantage of trading using opposite PI Advanced and Daewoo Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PI Advanced position performs unexpectedly, Daewoo Engineering 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 Daewoo Engineering will offset losses from the drop in Daewoo Engineering's long position.| PI Advanced vs. Iljin Materials Co | PI Advanced vs. Union Materials Corp | PI Advanced vs. Playgram Co | PI Advanced vs. National Plastic Co |
| Daewoo Engineering vs. Air Busan Co | Daewoo Engineering vs. Korea Air Svc | Daewoo Engineering vs. Cloud Air CoLtd | Daewoo Engineering vs. Jeju Air Co |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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