Correlation Between Korea Electronic and PJ Electronics
Can any of the company-specific risk be diversified away by investing in both Korea Electronic 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 Korea Electronic and PJ Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Electronic Certification and PJ Electronics Co, you can compare the effects of market volatilities on Korea Electronic 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 Korea Electronic with a short position of PJ Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electronic and PJ Electronics.
Diversification Opportunities for Korea Electronic and PJ Electronics
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Korea and 006140 is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electronic Certification and PJ Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJ Electronics and Korea Electronic 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 Korea Electronic Certification 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 Korea Electronic i.e., Korea Electronic and PJ Electronics go up and down completely randomly.
Pair Corralation between Korea Electronic and PJ Electronics
Assuming the 90 days trading horizon Korea Electronic is expected to generate 2.73 times less return on investment than PJ Electronics. But when comparing it to its historical volatility, Korea Electronic Certification is 1.87 times less risky than PJ Electronics. It trades about 0.25 of its potential returns per unit of risk. PJ Electronics Co is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 441,092 in PJ Electronics Co on October 24, 2024 and sell it today you would earn a total of 100,908 from holding PJ Electronics Co or generate 22.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Electronic Certification vs. PJ Electronics Co
Performance |
| Timeline |
| Korea Electronic Cer |
| PJ Electronics |
Korea Electronic and PJ Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electronic and PJ Electronics
The main advantage of trading using opposite Korea Electronic and PJ Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electronic 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.| Korea Electronic vs. Dongnam Chemical Co | Korea Electronic vs. Youngbo Chemical Co | Korea Electronic vs. Mgame Corp | Korea Electronic vs. Echomarketing CoLtd |
| PJ Electronics vs. Coloray International Investment | PJ Electronics vs. Korea Information Engineering | PJ Electronics vs. Daishin Information Communications | PJ Electronics vs. SV 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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