Correlation Between PJ Electronics and Partron Co

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Can any of the company-specific risk be diversified away by investing in both PJ Electronics and Partron Co 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 Partron Co 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 Partron Co, you can compare the effects of market volatilities on PJ Electronics and Partron Co 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 Partron Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of PJ Electronics and Partron Co.

Diversification Opportunities for PJ Electronics and Partron Co

0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between 006140 and Partron is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding PJ Electronics Co and Partron Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Partron Co 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 Partron Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Partron Co has no effect on the direction of PJ Electronics i.e., PJ Electronics and Partron Co go up and down completely randomly.

Pair Corralation between PJ Electronics and Partron Co

Assuming the 90 days trading horizon PJ Electronics Co is expected to under-perform the Partron Co. In addition to that, PJ Electronics is 1.69 times more volatile than Partron Co. It trades about -0.07 of its total potential returns per unit of risk. Partron Co is currently generating about -0.05 per unit of volatility. If you would invest  811,819  in Partron Co on September 12, 2024 and sell it today you would lose (117,819) from holding Partron Co or give up 14.51% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

PJ Electronics Co  vs.  Partron Co

 Performance 
       Timeline  
PJ Electronics 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days PJ Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Partron Co 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Partron Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Partron Co is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

PJ Electronics and Partron Co Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PJ Electronics and Partron Co

The main advantage of trading using opposite PJ Electronics and Partron Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PJ Electronics position performs unexpectedly, Partron Co 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 Partron Co will offset losses from the drop in Partron Co's long position.
The idea behind PJ Electronics Co and Partron Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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