Correlation Between PJ Electronics and National Plastic
Can any of the company-specific risk be diversified away by investing in both PJ Electronics and National Plastic 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 National Plastic 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 National Plastic Co, you can compare the effects of market volatilities on PJ Electronics and National Plastic 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 National Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of PJ Electronics and National Plastic.
Diversification Opportunities for PJ Electronics and National Plastic
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 006140 and National is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding PJ Electronics Co and National Plastic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Plastic 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 National Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Plastic has no effect on the direction of PJ Electronics i.e., PJ Electronics and National Plastic go up and down completely randomly.
Pair Corralation between PJ Electronics and National Plastic
Assuming the 90 days trading horizon PJ Electronics Co is expected to generate 5.87 times more return on investment than National Plastic. However, PJ Electronics is 5.87 times more volatile than National Plastic Co. It trades about 0.37 of its potential returns per unit of risk. National Plastic Co is currently generating about -0.62 per unit of risk. If you would invest 441,092 in PJ Electronics Co on October 24, 2024 and sell it today you would earn a total of 100,908 from holding PJ Electronics Co or generate 22.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PJ Electronics Co vs. National Plastic Co
Performance |
| Timeline |
| PJ Electronics |
| National Plastic |
PJ Electronics and National Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PJ Electronics and National Plastic
The main advantage of trading using opposite PJ Electronics and National Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PJ Electronics position performs unexpectedly, National Plastic 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 National Plastic will offset losses from the drop in National Plastic'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 |
| National Plastic vs. Kukil Metal Co | National Plastic vs. Homecast CoLtd | National Plastic vs. Wireless Power Amplifier | National Plastic vs. INFINITT Healthcare 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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