Correlation Between Daedong Steel and PJ Metal
Can any of the company-specific risk be diversified away by investing in both Daedong Steel 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 Daedong Steel and PJ Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daedong Steel Co and PJ Metal Co, you can compare the effects of market volatilities on Daedong Steel 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 Daedong Steel with a short position of PJ Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daedong Steel and PJ Metal.
Diversification Opportunities for Daedong Steel and PJ Metal
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Daedong and 128660 is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Daedong Steel Co and PJ Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJ Metal and Daedong Steel 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 Daedong Steel Co 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 Daedong Steel i.e., Daedong Steel and PJ Metal go up and down completely randomly.
Pair Corralation between Daedong Steel and PJ Metal
Assuming the 90 days trading horizon Daedong Steel Co is expected to generate 1.35 times more return on investment than PJ Metal. However, Daedong Steel is 1.35 times more volatile than PJ Metal Co. It trades about -0.1 of its potential returns per unit of risk. PJ Metal Co is currently generating about -0.16 per unit of risk. If you would invest 373,000 in Daedong Steel Co on August 29, 2024 and sell it today you would lose (21,000) from holding Daedong Steel Co or give up 5.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daedong Steel Co vs. PJ Metal Co
Performance |
| Timeline |
| Daedong Steel |
| PJ Metal |
Daedong Steel and PJ Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daedong Steel and PJ Metal
The main advantage of trading using opposite Daedong Steel and PJ Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daedong Steel 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.| Daedong Steel vs. Keum Kang Steel | Daedong Steel vs. Tplex Co | Daedong Steel vs. PJ Metal Co | Daedong Steel vs. Samhyun Steel Co |
| PJ Metal vs. Keum Kang Steel | PJ Metal vs. Tplex Co | PJ Metal vs. Samhyun Steel Co | PJ Metal vs. Wonil Special Steel |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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