Correlation Between PI Advanced and Daehan Steel
Can any of the company-specific risk be diversified away by investing in both PI Advanced and Daehan 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 Daehan 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 Daehan Steel, you can compare the effects of market volatilities on PI Advanced and Daehan 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 Daehan Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of PI Advanced and Daehan Steel.
Diversification Opportunities for PI Advanced and Daehan Steel
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 178920 and Daehan is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding PI Advanced Materials and Daehan Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daehan 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 Daehan Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daehan Steel has no effect on the direction of PI Advanced i.e., PI Advanced and Daehan Steel go up and down completely randomly.
Pair Corralation between PI Advanced and Daehan Steel
Assuming the 90 days trading horizon PI Advanced Materials is expected to under-perform the Daehan Steel. In addition to that, PI Advanced is 1.84 times more volatile than Daehan Steel. It trades about -0.21 of its total potential returns per unit of risk. Daehan Steel is currently generating about 0.2 per unit of volatility. If you would invest 1,256,000 in Daehan Steel on September 2, 2024 and sell it today you would earn a total of 295,000 from holding Daehan Steel or generate 23.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PI Advanced Materials vs. Daehan Steel
Performance |
| Timeline |
| PI Advanced Materials |
| Daehan Steel |
PI Advanced and Daehan Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PI Advanced and Daehan Steel
The main advantage of trading using opposite PI Advanced and Daehan Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PI Advanced position performs unexpectedly, Daehan 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 Daehan Steel will offset losses from the drop in Daehan 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 |
| Daehan Steel vs. LG Chemicals | Daehan Steel vs. POSCO Holdings | Daehan Steel vs. Hanwha Solutions | Daehan Steel vs. Hyundai Steel |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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