Correlation Between PH Tech and Miwon Chemical

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

Diversification Opportunities for PH Tech and Miwon Chemical

0.2

Correlation Coefficient

PH Tech  Miwon Chemical

Modest diversification

The 3 months correlation between 239890 and Miwon is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding PH Tech Co and Miwon Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miwon Chemical 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 Miwon Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miwon Chemical has no effect on the direction of PH Tech i.e., PH Tech and Miwon Chemical go up and down completely randomly.

Pair Corralation between PH Tech and Miwon Chemical

Assuming the 90 days trading horizon PH Tech Co is expected to under-perform the Miwon Chemical. In addition to that, PH Tech is 3.4 times more volatile than Miwon Chemical. It trades about -0.02 of its total potential returns per unit of risk. Miwon Chemical is currently generating about 0.05 per unit of volatility. If you would invest  6,273,821  in Miwon Chemical on October 5, 2024 and sell it today you would earn a total of  1,596,179  from holding Miwon Chemical or generate 25.44% return on investment over 90 days.

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

PH Tech Co  vs.  Miwon Chemical

PH Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PH Tech Co 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.

Miwon Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Miwon Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Miwon Chemical 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 Miwon Chemical

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

The idea behind PH Tech Co and Miwon Chemical 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.