Correlation Between PJ Electronics and NICE Information
Can any of the company-specific risk be diversified away by investing in both PJ Electronics and NICE Information 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 NICE Information 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 NICE Information Service, you can compare the effects of market volatilities on PJ Electronics and NICE Information 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 NICE Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of PJ Electronics and NICE Information.
Diversification Opportunities for PJ Electronics and NICE Information
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 006140 and NICE is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding PJ Electronics Co and NICE Information Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NICE Information Service 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 NICE Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NICE Information Service has no effect on the direction of PJ Electronics i.e., PJ Electronics and NICE Information go up and down completely randomly.
Pair Corralation between PJ Electronics and NICE Information
Assuming the 90 days trading horizon PJ Electronics Co is expected to generate 1.31 times more return on investment than NICE Information. However, PJ Electronics is 1.31 times more volatile than NICE Information Service. It trades about 0.13 of its potential returns per unit of risk. NICE Information Service is currently generating about 0.16 per unit of risk. If you would invest 575,000 in PJ Electronics Co on December 10, 2024 and sell it today you would earn a total of 36,000 from holding PJ Electronics Co or generate 6.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PJ Electronics Co vs. NICE Information Service
Performance |
| Timeline |
| PJ Electronics |
| NICE Information Service |
PJ Electronics and NICE Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PJ Electronics and NICE Information
The main advantage of trading using opposite PJ Electronics and NICE Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PJ Electronics position performs unexpectedly, NICE Information 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 NICE Information will offset losses from the drop in NICE Information's long position.| PJ Electronics vs. Nable Communications | PJ Electronics vs. Sangsin Energy Display | PJ Electronics vs. SK Telecom Co | PJ Electronics vs. Lotte Rental Co |
| NICE Information vs. Daishin Information Communications | NICE Information vs. Inzi Display CoLtd | NICE Information vs. Handok Clean Tech | NICE Information vs. Sangsin Energy Display |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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