Correlation Between Hannong Chemicals and PJ Electronics
Can any of the company-specific risk be diversified away by investing in both Hannong Chemicals and PJ Electronics 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 Hannong Chemicals and PJ Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannong Chemicals and PJ Electronics Co, you can compare the effects of market volatilities on Hannong Chemicals and PJ Electronics 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 Hannong Chemicals with a short position of PJ Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannong Chemicals and PJ Electronics.
Diversification Opportunities for Hannong Chemicals and PJ Electronics
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hannong and 006140 is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Hannong Chemicals and PJ Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJ Electronics and Hannong Chemicals 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 Hannong Chemicals are associated (or correlated) with PJ Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJ Electronics has no effect on the direction of Hannong Chemicals i.e., Hannong Chemicals and PJ Electronics go up and down completely randomly.
Pair Corralation between Hannong Chemicals and PJ Electronics
Assuming the 90 days trading horizon Hannong Chemicals is expected to generate 1.67 times more return on investment than PJ Electronics. However, Hannong Chemicals is 1.67 times more volatile than PJ Electronics Co. It trades about 0.37 of its potential returns per unit of risk. PJ Electronics Co is currently generating about 0.21 per unit of risk. If you would invest 1,369,000 in Hannong Chemicals on December 1, 2024 and sell it today you would earn a total of 578,000 from holding Hannong Chemicals or generate 42.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hannong Chemicals vs. PJ Electronics Co
Performance |
| Timeline |
| Hannong Chemicals |
| PJ Electronics |
Hannong Chemicals and PJ Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannong Chemicals and PJ Electronics
The main advantage of trading using opposite Hannong Chemicals and PJ Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannong Chemicals position performs unexpectedly, PJ Electronics 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 PJ Electronics will offset losses from the drop in PJ Electronics' long position.| Hannong Chemicals vs. Kyeryong Construction Industrial | Hannong Chemicals vs. Busan Industrial Co | Hannong Chemicals vs. LEENO Industrial | Hannong Chemicals vs. National Plastic Co |
| PJ Electronics vs. Daou Technology | PJ Electronics vs. SK IE Technology | PJ Electronics vs. Global Standard Technology | PJ Electronics vs. MS Autotech 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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