Correlation Between PJ Electronics and Hannong Chemicals
Can any of the company-specific risk be diversified away by investing in both PJ Electronics and Hannong Chemicals 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 Hannong Chemicals 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 Hannong Chemicals, you can compare the effects of market volatilities on PJ Electronics and Hannong Chemicals 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 Hannong Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of PJ Electronics and Hannong Chemicals.
Diversification Opportunities for PJ Electronics and Hannong Chemicals
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 006140 and Hannong is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding PJ Electronics Co and Hannong Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannong Chemicals 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 Hannong Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannong Chemicals has no effect on the direction of PJ Electronics i.e., PJ Electronics and Hannong Chemicals go up and down completely randomly.
Pair Corralation between PJ Electronics and Hannong Chemicals
Assuming the 90 days trading horizon PJ Electronics Co is expected to under-perform the Hannong Chemicals. But the stock apears to be less risky and, when comparing its historical volatility, PJ Electronics Co is 2.03 times less risky than Hannong Chemicals. The stock trades about -0.04 of its potential returns per unit of risk. The Hannong Chemicals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,081,567 in Hannong Chemicals on September 3, 2024 and sell it today you would earn a total of 326,433 from holding Hannong Chemicals or generate 30.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PJ Electronics Co vs. Hannong Chemicals
Performance |
| Timeline |
| PJ Electronics |
| Hannong Chemicals |
PJ Electronics and Hannong Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PJ Electronics and Hannong Chemicals
The main advantage of trading using opposite PJ Electronics and Hannong Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PJ Electronics position performs unexpectedly, Hannong Chemicals 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 Hannong Chemicals will offset losses from the drop in Hannong Chemicals' long position.| PJ Electronics vs. Daejoo Electronic Materials | PJ Electronics vs. Parksystems Corp | PJ Electronics vs. BH Co | PJ Electronics vs. Partron Co |
| Hannong Chemicals vs. AptaBio Therapeutics | Hannong Chemicals vs. Daewoo SBI SPAC | Hannong Chemicals vs. Dream Security co | Hannong Chemicals vs. Microfriend |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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