Correlation Between Korea Industrial and PJ Metal
Can any of the company-specific risk be diversified away by investing in both Korea Industrial and PJ Metal 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 Korea Industrial and PJ Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Industrial Co and PJ Metal Co, you can compare the effects of market volatilities on Korea Industrial and PJ Metal 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 Korea Industrial with a short position of PJ Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Industrial and PJ Metal.
Diversification Opportunities for Korea Industrial and PJ Metal
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and 128660 is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Korea Industrial Co and PJ Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJ Metal and Korea Industrial 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 Korea Industrial Co are associated (or correlated) with PJ Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJ Metal has no effect on the direction of Korea Industrial i.e., Korea Industrial and PJ Metal go up and down completely randomly.
Pair Corralation between Korea Industrial and PJ Metal
Assuming the 90 days trading horizon Korea Industrial Co is expected to generate 3.13 times more return on investment than PJ Metal. However, Korea Industrial is 3.13 times more volatile than PJ Metal Co. It trades about 0.31 of its potential returns per unit of risk. PJ Metal Co is currently generating about -0.04 per unit of risk. If you would invest 258,500 in Korea Industrial Co on October 30, 2024 and sell it today you would earn a total of 19,000 from holding Korea Industrial Co or generate 7.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Industrial Co vs. PJ Metal Co
Performance |
| Timeline |
| Korea Industrial |
| PJ Metal |
Korea Industrial and PJ Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Industrial and PJ Metal
The main advantage of trading using opposite Korea Industrial and PJ Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Industrial position performs unexpectedly, PJ Metal 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 PJ Metal will offset losses from the drop in PJ Metal's long position.| Korea Industrial vs. INFINITT Healthcare Co | Korea Industrial vs. LG Household Healthcare | Korea Industrial vs. Fine Besteel Co | Korea Industrial vs. Hwangkum Steel Technology |
| PJ Metal vs. Nable Communications | PJ Metal vs. Cloud Air CoLtd | PJ Metal vs. Daishin Information Communications | PJ Metal vs. Korea Air Svc |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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