Correlation Between PJ Electronics and Korean Reinsurance
Can any of the company-specific risk be diversified away by investing in both PJ Electronics and Korean Reinsurance 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 PJ Electronics and Korean Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PJ Electronics Co and Korean Reinsurance Co, you can compare the effects of market volatilities on PJ Electronics and Korean Reinsurance 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 PJ Electronics with a short position of Korean Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of PJ Electronics and Korean Reinsurance.
Diversification Opportunities for PJ Electronics and Korean Reinsurance
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 006140 and Korean is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding PJ Electronics Co and Korean Reinsurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Reinsurance and PJ Electronics 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 PJ Electronics Co are associated (or correlated) with Korean Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Reinsurance has no effect on the direction of PJ Electronics i.e., PJ Electronics and Korean Reinsurance go up and down completely randomly.
Pair Corralation between PJ Electronics and Korean Reinsurance
Assuming the 90 days trading horizon PJ Electronics Co is expected to generate 1.74 times more return on investment than Korean Reinsurance. However, PJ Electronics is 1.74 times more volatile than Korean Reinsurance Co. It trades about 0.06 of its potential returns per unit of risk. Korean Reinsurance Co is currently generating about 0.08 per unit of risk. If you would invest 502,436 in PJ Electronics Co on October 24, 2024 and sell it today you would earn a total of 39,564 from holding PJ Electronics Co or generate 7.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PJ Electronics Co vs. Korean Reinsurance Co
Performance |
| Timeline |
| PJ Electronics |
| Korean Reinsurance |
PJ Electronics and Korean Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PJ Electronics and Korean Reinsurance
The main advantage of trading using opposite PJ Electronics and Korean Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PJ Electronics position performs unexpectedly, Korean Reinsurance 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 Korean Reinsurance will offset losses from the drop in Korean Reinsurance's long position.| PJ Electronics vs. Coloray International Investment | PJ Electronics vs. Korea Information Engineering | PJ Electronics vs. Daishin Information Communications | PJ Electronics vs. SV Investment |
| Korean Reinsurance vs. Daeduck Electronics Co | Korean Reinsurance vs. NH Investment Securities | Korean Reinsurance vs. Innowireless Co | Korean Reinsurance vs. PJ Electronics 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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