Correlation Between PH Tech and Korea Line

Can any of the company-specific risk be diversified away by investing in both PH Tech and Korea Line 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 PH Tech and Korea Line into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PH Tech Co and Korea Line, you can compare the effects of market volatilities on PH Tech and Korea Line 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 PH Tech with a short position of Korea Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of PH Tech and Korea Line.

Diversification Opportunities for PH Tech and Korea Line

0.69

Correlation Coefficient

PH Tech  Korea Line

Poor diversification

The 3 months correlation between 239890 and Korea is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding PH Tech Co and Korea Line in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Line and PH Tech 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 PH Tech Co are associated (or correlated) with Korea Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Line has no effect on the direction of PH Tech i.e., PH Tech and Korea Line go up and down completely randomly.

Pair Corralation between PH Tech and Korea Line

Assuming the 90 days trading horizon PH Tech Co is expected to generate 2.12 times more return on investment than Korea Line. However, PH Tech is 2.12 times more volatile than Korea Line. It trades about 0.02 of its potential returns per unit of risk. Korea Line is currently generating about -0.05 per unit of risk. If you would invest  824,000  in PH Tech Co on October 10, 2024 and sell it today you would lose (9,000) from holding PH Tech Co or give up 1.09% of portfolio value over 90 days.

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

PH Tech Co  vs.  Korea Line

PH Tech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PH Tech Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, PH Tech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Korea Line

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PH Tech and Korea Line

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

The idea behind PH Tech Co and Korea Line 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.