Correlation Between PI Advanced and Taewoong Logistics

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

Diversification Opportunities for PI Advanced and Taewoong Logistics

0.2

Correlation Coefficient

PI Advanced  Taewoong Logistics

Modest diversification

The 3 months correlation between 178920 and Taewoong is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding PI Advanced Materials and Taewoong Logistics CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taewoong Logistics CoLtd 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 Taewoong Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taewoong Logistics CoLtd has no effect on the direction of PI Advanced i.e., PI Advanced and Taewoong Logistics go up and down completely randomly.

Pair Corralation between PI Advanced and Taewoong Logistics

Assuming the 90 days trading horizon PI Advanced is expected to generate 1.18 times less return on investment than Taewoong Logistics. In addition to that, PI Advanced is 2.3 times more volatile than Taewoong Logistics CoLtd. It trades about 0.04 of its total potential returns per unit of risk. Taewoong Logistics CoLtd is currently generating about 0.11 per unit of volatility. If you would invest  286,000  in Taewoong Logistics CoLtd on December 25, 2024 and sell it today you would earn a total of  24,000  from holding Taewoong Logistics CoLtd or generate 8.39% return on investment over 90 days.

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

PI Advanced Materials  vs.  Taewoong Logistics CoLtd

PI Advanced Materials

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PI Advanced Materials are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, PI Advanced may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Taewoong Logistics CoLtd

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Taewoong Logistics CoLtd are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Taewoong Logistics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with PI Advanced and Taewoong Logistics

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

The idea behind PI Advanced Materials and Taewoong Logistics CoLtd 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.