Correlation Between Pyung Hwa and Settlebank

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

By analyzing existing cross correlation between Pyung Hwa Industrial and Settlebank, you can compare the effects of market volatilities on Pyung Hwa and Settlebank 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 Pyung Hwa with a short position of Settlebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pyung Hwa and Settlebank.

Diversification Opportunities for Pyung Hwa and Settlebank

0.9

Correlation Coefficient

Pyung Hwa  Settlebank

Almost no diversification

The 3 months correlation between Pyung and Settlebank is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Pyung Hwa Industrial and Settlebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Settlebank and Pyung Hwa 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 Pyung Hwa Industrial are associated (or correlated) with Settlebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Settlebank has no effect on the direction of Pyung Hwa i.e., Pyung Hwa and Settlebank go up and down completely randomly.

Pair Corralation between Pyung Hwa and Settlebank

Assuming the 90 days trading horizon Pyung Hwa Industrial is expected to generate 0.59 times more return on investment than Settlebank. However, Pyung Hwa Industrial is 1.7 times less risky than Settlebank. It trades about -0.08 of its potential returns per unit of risk. Settlebank is currently generating about -0.06 per unit of risk. If you would invest  100,400  in Pyung Hwa Industrial on September 17, 2024 and sell it today you would lose (9,200) from holding Pyung Hwa Industrial or give up 9.16% of portfolio value over 90 days.

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

Pyung Hwa Industrial  vs.  Settlebank

Pyung Hwa Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pyung Hwa Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Settlebank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Settlebank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Pyung Hwa and Settlebank

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

The idea behind Pyung Hwa Industrial and Settlebank 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.