Correlation Between Daewoo Engineering and PJ Metal
Can any of the company-specific risk be diversified away by investing in both Daewoo Engineering and PJ Metal 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 Daewoo Engineering and PJ Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewoo Engineering Construction and PJ Metal Co, you can compare the effects of market volatilities on Daewoo Engineering and PJ Metal 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 Daewoo Engineering with a short position of PJ Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo Engineering and PJ Metal.
Diversification Opportunities for Daewoo Engineering and PJ Metal
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Daewoo and 128660 is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo Engineering Constructio and PJ Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJ Metal and Daewoo Engineering 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 Daewoo Engineering Construction are associated (or correlated) with PJ Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJ Metal has no effect on the direction of Daewoo Engineering i.e., Daewoo Engineering and PJ Metal go up and down completely randomly.
Pair Corralation between Daewoo Engineering and PJ Metal
Assuming the 90 days trading horizon Daewoo Engineering Construction is expected to under-perform the PJ Metal. But the stock apears to be less risky and, when comparing its historical volatility, Daewoo Engineering Construction is 1.81 times less risky than PJ Metal. The stock trades about -0.02 of its potential returns per unit of risk. The PJ Metal Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 338,500 in PJ Metal Co on August 27, 2024 and sell it today you would lose (31,500) from holding PJ Metal Co or give up 9.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo Engineering Constructio vs. PJ Metal Co
Performance |
| Timeline |
| Daewoo Engineering |
| PJ Metal |
Daewoo Engineering and PJ Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo Engineering and PJ Metal
The main advantage of trading using opposite Daewoo Engineering and PJ Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo Engineering position performs unexpectedly, PJ Metal 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 Metal will offset losses from the drop in PJ Metal's long position.| Daewoo Engineering vs. PI Advanced Materials | Daewoo Engineering vs. Intellian Technologies | Daewoo Engineering vs. Vitzro Tech Co | Daewoo Engineering vs. CU Tech Corp |
| PJ Metal vs. Camus Engineering Construction | PJ Metal vs. Daewoo Engineering Construction | PJ Metal vs. Barunson Entertainment Arts | PJ Metal vs. Shinsegae Engineering Construction |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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