Correlation Between Sung Bo and PJ Electronics
Can any of the company-specific risk be diversified away by investing in both Sung Bo and PJ Electronics 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 Sung Bo and PJ Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sung Bo Chemicals and PJ Electronics Co, you can compare the effects of market volatilities on Sung Bo and PJ Electronics 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 Sung Bo with a short position of PJ Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sung Bo and PJ Electronics.
Diversification Opportunities for Sung Bo and PJ Electronics
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sung and 006140 is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Sung Bo Chemicals and PJ Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJ Electronics and Sung Bo 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 Sung Bo Chemicals are associated (or correlated) with PJ Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJ Electronics has no effect on the direction of Sung Bo i.e., Sung Bo and PJ Electronics go up and down completely randomly.
Pair Corralation between Sung Bo and PJ Electronics
Assuming the 90 days trading horizon Sung Bo Chemicals is expected to generate 0.52 times more return on investment than PJ Electronics. However, Sung Bo Chemicals is 1.91 times less risky than PJ Electronics. It trades about -0.12 of its potential returns per unit of risk. PJ Electronics Co is currently generating about -0.11 per unit of risk. If you would invest 300,500 in Sung Bo Chemicals on September 3, 2024 and sell it today you would lose (49,000) from holding Sung Bo Chemicals or give up 16.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sung Bo Chemicals vs. PJ Electronics Co
Performance |
| Timeline |
| Sung Bo Chemicals |
| PJ Electronics |
Sung Bo and PJ Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sung Bo and PJ Electronics
The main advantage of trading using opposite Sung Bo and PJ Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sung Bo position performs unexpectedly, PJ Electronics 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 Electronics will offset losses from the drop in PJ Electronics' long position.| Sung Bo vs. Global Standard Technology | Sung Bo vs. Samsung Life Insurance | Sung Bo vs. Kakao Games Corp | Sung Bo vs. Dong A Steel Technology |
| PJ Electronics vs. Daejoo Electronic Materials | PJ Electronics vs. Parksystems Corp | PJ Electronics vs. BH Co | PJ Electronics vs. Partron Co |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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