Correlation Between PI Advanced and Ssangyong Information

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

Diversification Opportunities for PI Advanced and Ssangyong Information

-0.16

Correlation Coefficient

PI Advanced  Ssangyong Information

Good diversification

The 3 months correlation between 178920 and Ssangyong is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding PI Advanced Materials and Ssangyong Information Communic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ssangyong Information 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 Ssangyong Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ssangyong Information has no effect on the direction of PI Advanced i.e., PI Advanced and Ssangyong Information go up and down completely randomly.

Pair Corralation between PI Advanced and Ssangyong Information

Assuming the 90 days trading horizon PI Advanced is expected to generate 4.65 times less return on investment than Ssangyong Information. In addition to that, PI Advanced is 2.42 times more volatile than Ssangyong Information Communication. It trades about 0.01 of its total potential returns per unit of risk. Ssangyong Information Communication is currently generating about 0.07 per unit of volatility. If you would invest  61,100  in Ssangyong Information Communication on October 11, 2024 and sell it today you would earn a total of  3,500  from holding Ssangyong Information Communication or generate 5.73% 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.  Ssangyong Information Communic

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 somewhat strong basic indicators, PI Advanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ssangyong Information

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ssangyong Information Communication are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ssangyong Information may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PI Advanced and Ssangyong Information

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

The idea behind PI Advanced Materials and Ssangyong Information Communication 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.