Correlation Between Pyung Hwa and Raphas Co

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

Diversification Opportunities for Pyung Hwa and Raphas Co

0.6

Correlation Coefficient

Pyung Hwa  Raphas Co

Poor diversification

The 3 months correlation between Pyung and Raphas is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Pyung Hwa Industrial and Raphas Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raphas Co 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 Raphas Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raphas Co has no effect on the direction of Pyung Hwa i.e., Pyung Hwa and Raphas Co go up and down completely randomly.

Pair Corralation between Pyung Hwa and Raphas Co

Assuming the 90 days trading horizon Pyung Hwa Industrial is expected to under-perform the Raphas Co. But the stock apears to be less risky and, when comparing its historical volatility, Pyung Hwa Industrial is 3.33 times less risky than Raphas Co. The stock trades about -0.08 of its potential returns per unit of risk. The Raphas Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,928,000  in Raphas Co on September 17, 2024 and sell it today you would lose (342,000) from holding Raphas Co or give up 17.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.58%
Values	Daily Returns

Pyung Hwa Industrial  vs.  Raphas Co

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.

Raphas Co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raphas 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.

Pair Trading with Pyung Hwa and Raphas Co

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

The idea behind Pyung Hwa Industrial and Raphas Co 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.