Correlation Between PI Advanced and SK Square
Can any of the company-specific risk be diversified away by investing in both PI Advanced and SK Square 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 SK Square 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 SK Square Co, you can compare the effects of market volatilities on PI Advanced and SK Square 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 SK Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of PI Advanced and SK Square.
Diversification Opportunities for PI Advanced and SK Square
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 178920 and 402340 is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding PI Advanced Materials and SK Square Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Square 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 SK Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Square has no effect on the direction of PI Advanced i.e., PI Advanced and SK Square go up and down completely randomly.
Pair Corralation between PI Advanced and SK Square
Assuming the 90 days trading horizon PI Advanced Materials is expected to under-perform the SK Square. In addition to that, PI Advanced is 1.06 times more volatile than SK Square Co. It trades about -0.02 of its total potential returns per unit of risk. SK Square Co is currently generating about 0.07 per unit of volatility. If you would invest 3,580,000 in SK Square Co on September 3, 2024 and sell it today you would earn a total of 3,770,000 from holding SK Square Co or generate 105.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PI Advanced Materials vs. SK Square Co
Performance |
| Timeline |
| PI Advanced Materials |
| SK Square |
PI Advanced and SK Square Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PI Advanced and SK Square
The main advantage of trading using opposite PI Advanced and SK Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PI Advanced position performs unexpectedly, SK Square 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 SK Square will offset losses from the drop in SK Square's long position.| PI Advanced vs. Lotte Non Life Insurance | PI Advanced vs. Display Tech Co | PI Advanced vs. Korean Reinsurance Co | PI Advanced vs. Grand Korea Leisure |
| SK Square vs. PI Advanced Materials | SK Square vs. Top Material Co | SK Square vs. Daewoo Engineering Construction | SK Square vs. Ssangyong Materials Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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