Correlation Between Phoenix Materials and Myoung Shin

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

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

Diversification Opportunities for Phoenix Materials and Myoung Shin

0.42

Correlation Coefficient

Phoenix Materials  Myoung Shin

Very weak diversification

The 3 months correlation between Phoenix and Myoung is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Phoenix Materials Co and Myoung Shin Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Myoung Shin Industrial and Phoenix 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 Phoenix Materials Co are associated (or correlated) with Myoung Shin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Myoung Shin Industrial has no effect on the direction of Phoenix Materials i.e., Phoenix Materials and Myoung Shin go up and down completely randomly.

Pair Corralation between Phoenix Materials and Myoung Shin

Assuming the 90 days trading horizon Phoenix Materials Co is expected to under-perform the Myoung Shin. But the stock apears to be less risky and, when comparing its historical volatility, Phoenix Materials Co is 1.15 times less risky than Myoung Shin. The stock trades about -0.08 of its potential returns per unit of risk. The Myoung Shin Industrial is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,209,000  in Myoung Shin Industrial on September 13, 2024 and sell it today you would lose (89,000) from holding Myoung Shin Industrial or give up 7.36% of portfolio value over 90 days.

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

Phoenix Materials Co  vs.  Myoung Shin Industrial

Phoenix Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phoenix 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Myoung Shin Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Myoung Shin Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Myoung Shin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Phoenix Materials and Myoung Shin

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

The idea behind Phoenix Materials Co and Myoung Shin Industrial 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.