Correlation Between Iljin Materials and PI Advanced

Can any of the company-specific risk be diversified away by investing in both Iljin Materials and PI Advanced 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 Iljin Materials and PI Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Iljin Materials Co and PI Advanced Materials, you can compare the effects of market volatilities on Iljin Materials and PI Advanced 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 Iljin Materials with a short position of PI Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iljin Materials and PI Advanced.

Diversification Opportunities for Iljin Materials and PI Advanced

0.62

Correlation Coefficient

Iljin Materials  PI Advanced

Poor diversification

The 3 months correlation between Iljin and 178920 is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Iljin Materials Co and PI Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PI Advanced Materials and Iljin Materials 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 Iljin Materials Co are associated (or correlated) with PI Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PI Advanced Materials has no effect on the direction of Iljin Materials i.e., Iljin Materials and PI Advanced go up and down completely randomly.

Pair Corralation between Iljin Materials and PI Advanced

Assuming the 90 days trading horizon Iljin Materials Co is expected to under-perform the PI Advanced. But the stock apears to be less risky and, when comparing its historical volatility, Iljin Materials Co is 1.03 times less risky than PI Advanced. The stock trades about -0.25 of its potential returns per unit of risk. The PI Advanced Materials is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest  2,650,000  in PI Advanced Materials on August 31, 2024 and sell it today you would lose (1,009,000) from holding PI Advanced Materials or give up 38.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Iljin Materials Co  vs.  PI Advanced Materials

Iljin Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iljin Materials Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

PI Advanced Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PI Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Iljin Materials and PI Advanced

The main advantage of trading using opposite Iljin Materials and PI Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iljin Materials position performs unexpectedly, PI Advanced 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 PI Advanced will offset losses from the drop in PI Advanced's long position.

The idea behind Iljin Materials Co and PI Advanced Materials pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.