Correlation Between PI Advanced and Jin Air

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

Diversification Opportunities for PI Advanced and Jin Air

-0.04

Correlation Coefficient

PI Advanced  Jin Air

Good diversification

The 3 months correlation between 178920 and Jin is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding PI Advanced Materials and Jin Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jin Air 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 Jin Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jin Air has no effect on the direction of PI Advanced i.e., PI Advanced and Jin Air go up and down completely randomly.

Pair Corralation between PI Advanced and Jin Air

Assuming the 90 days trading horizon PI Advanced Materials is expected to generate 1.45 times more return on investment than Jin Air. However, PI Advanced is 1.45 times more volatile than Jin Air Co. It trades about -0.02 of its potential returns per unit of risk. Jin Air Co is currently generating about -0.04 per unit of risk. If you would invest  3,351,995  in PI Advanced Materials on October 24, 2024 and sell it today you would lose (1,510,995) from holding PI Advanced Materials or give up 45.08% of portfolio value over 90 days.

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

PI Advanced Materials  vs.  Jin Air Co

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 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.

Jin Air

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PI Advanced and Jin Air

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

The idea behind PI Advanced Materials and Jin Air 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.