Correlation Between PJ Electronics and Korea Electronic
Can any of the company-specific risk be diversified away by investing in both PJ Electronics and Korea Electronic 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 Korea Electronic 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 Korea Electronic Certification, you can compare the effects of market volatilities on PJ Electronics and Korea Electronic 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 Korea Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of PJ Electronics and Korea Electronic.
Diversification Opportunities for PJ Electronics and Korea Electronic
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 006140 and Korea is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding PJ Electronics Co and Korea Electronic Certification in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Electronic Cer 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 Korea Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Electronic Cer has no effect on the direction of PJ Electronics i.e., PJ Electronics and Korea Electronic go up and down completely randomly.
Pair Corralation between PJ Electronics and Korea Electronic
Assuming the 90 days trading horizon PJ Electronics Co is expected to generate 1.24 times more return on investment than Korea Electronic. However, PJ Electronics is 1.24 times more volatile than Korea Electronic Certification. It trades about 0.03 of its potential returns per unit of risk. Korea Electronic Certification is currently generating about -0.05 per unit of risk. If you would invest 518,989 in PJ Electronics Co on October 24, 2024 and sell it today you would earn a total of 23,011 from holding PJ Electronics Co or generate 4.43% 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. Korea Electronic Certification
Performance |
| Timeline |
| PJ Electronics |
| Korea Electronic Cer |
PJ Electronics and Korea Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PJ Electronics and Korea Electronic
The main advantage of trading using opposite PJ Electronics and Korea Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PJ Electronics position performs unexpectedly, Korea Electronic 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 Korea Electronic will offset losses from the drop in Korea Electronic'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 |
| Korea Electronic vs. Dongnam Chemical Co | Korea Electronic vs. Youngbo Chemical Co | Korea Electronic vs. Mgame Corp | Korea Electronic vs. Echomarketing CoLtd |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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