Correlation Between PH Tech and Daehan Steel

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

Diversification Opportunities for PH Tech and Daehan Steel

0.58

Correlation Coefficient

PH Tech  Daehan Steel

Very weak diversification

The 3 months correlation between 239890 and Daehan is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding PH Tech Co and Daehan Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daehan Steel 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 Daehan Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daehan Steel has no effect on the direction of PH Tech i.e., PH Tech and Daehan Steel go up and down completely randomly.

Pair Corralation between PH Tech and Daehan Steel

Assuming the 90 days trading horizon PH Tech Co is expected to generate 2.14 times more return on investment than Daehan Steel. However, PH Tech is 2.14 times more volatile than Daehan Steel. It trades about 0.1 of its potential returns per unit of risk. Daehan Steel is currently generating about -0.02 per unit of risk. If you would invest  754,000  in PH Tech Co on October 26, 2024 and sell it today you would earn a total of  34,000  from holding PH Tech Co or generate 4.51% return on investment over 90 days.

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

PH Tech Co  vs.  Daehan Steel

PH Tech

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PH Tech Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, PH Tech sustained solid returns over the last few months and may actually be approaching a breakup point.

Daehan Steel

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Daehan Steel are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daehan Steel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PH Tech and Daehan Steel

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

The idea behind PH Tech Co and Daehan Steel 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.

Check out your portfolio center.

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.