Correlation Between Korea Investment and PJ Metal
Can any of the company-specific risk be diversified away by investing in both Korea Investment 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 Korea Investment and PJ Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Investment Holdings and PJ Metal Co, you can compare the effects of market volatilities on Korea Investment 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 Korea Investment with a short position of PJ Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Investment and PJ Metal.
Diversification Opportunities for Korea Investment and PJ Metal
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Korea and 128660 is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Korea Investment Holdings and PJ Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJ Metal and Korea Investment 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 Investment Holdings 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 Korea Investment i.e., Korea Investment and PJ Metal go up and down completely randomly.
Pair Corralation between Korea Investment and PJ Metal
Assuming the 90 days trading horizon Korea Investment Holdings is expected to generate 1.75 times more return on investment than PJ Metal. However, Korea Investment is 1.75 times more volatile than PJ Metal Co. It trades about 0.22 of its potential returns per unit of risk. PJ Metal Co is currently generating about 0.15 per unit of risk. If you would invest 5,310,000 in Korea Investment Holdings on October 26, 2024 and sell it today you would earn a total of 240,000 from holding Korea Investment Holdings or generate 4.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Investment Holdings vs. PJ Metal Co
Performance |
| Timeline |
| Korea Investment Holdings |
| PJ Metal |
Korea Investment and PJ Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Investment and PJ Metal
The main advantage of trading using opposite Korea Investment and PJ Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Investment 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.| Korea Investment vs. LAKE MATERIALS LTD | Korea Investment vs. Ecoplastic | Korea Investment vs. Lake Materials Co | Korea Investment vs. Bosung Power Technology |
| PJ Metal vs. Korea Investment Holdings | PJ Metal vs. Pureun Mutual Savings | PJ Metal vs. CKH Food Health | PJ Metal vs. Hyundai Green Food |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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