Correlation Between Sungwoo Techron and PI Advanced

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

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

Diversification Opportunities for Sungwoo Techron and PI Advanced

0.88

Correlation Coefficient

Sungwoo Techron  PI Advanced

Very poor diversification

The 3 months correlation between Sungwoo and 178920 is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Sungwoo Techron CoLtd 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 Sungwoo Techron 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 Sungwoo Techron CoLtd 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 Sungwoo Techron i.e., Sungwoo Techron and PI Advanced go up and down completely randomly.

Pair Corralation between Sungwoo Techron and PI Advanced

Assuming the 90 days trading horizon Sungwoo Techron CoLtd is expected to generate 0.81 times more return on investment than PI Advanced. However, Sungwoo Techron CoLtd is 1.24 times less risky than PI Advanced. It trades about -0.02 of its potential returns per unit of risk. PI Advanced Materials is currently generating about -0.02 per unit of risk. If you would invest  392,037  in Sungwoo Techron CoLtd on October 4, 2024 and sell it today you would lose (140,037) from holding Sungwoo Techron CoLtd or give up 35.72% of portfolio value over 90 days.

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

Sungwoo Techron CoLtd  vs.  PI Advanced Materials

Sungwoo Techron CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sungwoo Techron CoLtd 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.

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

Pair Trading with Sungwoo Techron and PI Advanced

The main advantage of trading using opposite Sungwoo Techron and PI Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sungwoo Techron 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 Sungwoo Techron CoLtd 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 Stocks Directory module to find actively traded stocks across global markets.