Correlation Between PI Advanced and Daehan Synthetic

Can any of the company-specific risk be diversified away by investing in both PI Advanced and Daehan Synthetic 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 Synthetic 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 Synthetic Fiber, you can compare the effects of market volatilities on PI Advanced and Daehan Synthetic 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 Synthetic. Check out your portfolio center. Please also check ongoing floating volatility patterns of PI Advanced and Daehan Synthetic.

Diversification Opportunities for PI Advanced and Daehan Synthetic

-0.29

Correlation Coefficient

PI Advanced  Daehan Synthetic

Very good diversification

The 3 months correlation between 178920 and Daehan is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding PI Advanced Materials and Daehan Synthetic Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daehan Synthetic Fiber 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 Synthetic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daehan Synthetic Fiber has no effect on the direction of PI Advanced i.e., PI Advanced and Daehan Synthetic go up and down completely randomly.

Pair Corralation between PI Advanced and Daehan Synthetic

Assuming the 90 days trading horizon PI Advanced Materials is expected to under-perform the Daehan Synthetic. In addition to that, PI Advanced is 3.13 times more volatile than Daehan Synthetic Fiber. It trades about -0.13 of its total potential returns per unit of risk. Daehan Synthetic Fiber is currently generating about 0.08 per unit of volatility. If you would invest  10,600,000  in Daehan Synthetic Fiber on September 13, 2024 and sell it today you would earn a total of  500,000  from holding Daehan Synthetic Fiber or generate 4.72% 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.  Daehan Synthetic Fiber

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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Daehan Synthetic Fiber

Risk-Adjusted Performance

6 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Daehan Synthetic Fiber are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Daehan Synthetic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PI Advanced and Daehan Synthetic

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

The idea behind PI Advanced Materials and Daehan Synthetic Fiber 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..