Correlation Between PJ Electronics and Bookook Steel
Can any of the company-specific risk be diversified away by investing in both PJ Electronics and Bookook Steel 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 Bookook Steel 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 Bookook Steel, you can compare the effects of market volatilities on PJ Electronics and Bookook Steel 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 Bookook Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of PJ Electronics and Bookook Steel.
Diversification Opportunities for PJ Electronics and Bookook Steel
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 006140 and Bookook is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding PJ Electronics Co and Bookook Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bookook Steel 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 Bookook Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bookook Steel has no effect on the direction of PJ Electronics i.e., PJ Electronics and Bookook Steel go up and down completely randomly.
Pair Corralation between PJ Electronics and Bookook Steel
Assuming the 90 days trading horizon PJ Electronics Co is expected to under-perform the Bookook Steel. In addition to that, PJ Electronics is 1.68 times more volatile than Bookook Steel. It trades about -0.16 of its total potential returns per unit of risk. Bookook Steel is currently generating about -0.1 per unit of volatility. If you would invest 249,000 in Bookook Steel on September 1, 2024 and sell it today you would lose (11,000) from holding Bookook Steel or give up 4.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PJ Electronics Co vs. Bookook Steel
Performance |
| Timeline |
| PJ Electronics |
| Bookook Steel |
PJ Electronics and Bookook Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PJ Electronics and Bookook Steel
The main advantage of trading using opposite PJ Electronics and Bookook Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PJ Electronics position performs unexpectedly, Bookook Steel 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 Bookook Steel will offset losses from the drop in Bookook Steel's long position.| PJ Electronics vs. Daejoo Electronic Materials | PJ Electronics vs. Parksystems Corp | PJ Electronics vs. BH Co | PJ Electronics vs. Partron Co |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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