Correlation Between PI Advanced and Daejoo Electronic
Can any of the company-specific risk be diversified away by investing in both PI Advanced and Daejoo Electronic 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 Daejoo Electronic 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 Daejoo Electronic Materials, you can compare the effects of market volatilities on PI Advanced and Daejoo Electronic 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 Daejoo Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of PI Advanced and Daejoo Electronic.
Diversification Opportunities for PI Advanced and Daejoo Electronic
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 178920 and Daejoo is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding PI Advanced Materials and Daejoo Electronic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejoo Electronic 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 Daejoo Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejoo Electronic has no effect on the direction of PI Advanced i.e., PI Advanced and Daejoo Electronic go up and down completely randomly.
Pair Corralation between PI Advanced and Daejoo Electronic
Assuming the 90 days trading horizon PI Advanced Materials is expected to under-perform the Daejoo Electronic. But the stock apears to be less risky and, when comparing its historical volatility, PI Advanced Materials is 1.2 times less risky than Daejoo Electronic. The stock trades about -0.04 of its potential returns per unit of risk. The Daejoo Electronic Materials is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 9,768,357 in Daejoo Electronic Materials on August 31, 2024 and sell it today you would lose (1,458,357) from holding Daejoo Electronic Materials or give up 14.93% 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. Daejoo Electronic Materials
Performance |
| Timeline |
| PI Advanced Materials |
| Daejoo Electronic |
PI Advanced and Daejoo Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PI Advanced and Daejoo Electronic
The main advantage of trading using opposite PI Advanced and Daejoo Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PI Advanced position performs unexpectedly, Daejoo Electronic 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 Daejoo Electronic will offset losses from the drop in Daejoo Electronic'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 |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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