Correlation Between PH Tech and KB No2

Can any of the company-specific risk be diversified away by investing in both PH Tech and KB No2 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 KB No2 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 KB No2 Special, you can compare the effects of market volatilities on PH Tech and KB No2 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 KB No2. Check out your portfolio center. Please also check ongoing floating volatility patterns of PH Tech and KB No2.

Diversification Opportunities for PH Tech and KB No2

0.26

Correlation Coefficient

PH Tech  KB No2

Modest diversification

The 3 months correlation between 239890 and 192250 is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding PH Tech Co and KB No2 Special in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB No2 Special 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 KB No2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB No2 Special has no effect on the direction of PH Tech i.e., PH Tech and KB No2 go up and down completely randomly.

Pair Corralation between PH Tech and KB No2

Assuming the 90 days trading horizon PH Tech Co is expected to generate 1.24 times more return on investment than KB No2. However, PH Tech is 1.24 times more volatile than KB No2 Special. It trades about -0.01 of its potential returns per unit of risk. KB No2 Special is currently generating about -0.05 per unit of risk. If you would invest  1,427,000  in PH Tech Co on October 13, 2024 and sell it today you would lose (572,000) from holding PH Tech Co or give up 40.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.1%
Values	Daily Returns

PH Tech Co  vs.  KB No2 Special

PH Tech

Risk-Adjusted Performance

3 of 100

Insignificant

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

KB No2 Special

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KB No2 Special has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KB No2 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 KB No2

The main advantage of trading using opposite PH Tech and KB No2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PH Tech position performs unexpectedly, KB No2 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 KB No2 will offset losses from the drop in KB No2's long position.

The idea behind PH Tech Co and KB No2 Special 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.