Correlation Between Global Standard and PJ Electronics
Can any of the company-specific risk be diversified away by investing in both Global Standard 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 Global Standard and PJ Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Standard Technology and PJ Electronics Co, you can compare the effects of market volatilities on Global Standard 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 Global Standard with a short position of PJ Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Standard and PJ Electronics.
Diversification Opportunities for Global Standard and PJ Electronics
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and 006140 is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Global Standard Technology and PJ Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJ Electronics and Global Standard 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 Global Standard Technology 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 Global Standard i.e., Global Standard and PJ Electronics go up and down completely randomly.
Pair Corralation between Global Standard and PJ Electronics
Assuming the 90 days trading horizon Global Standard Technology is expected to generate 1.62 times more return on investment than PJ Electronics. However, Global Standard is 1.62 times more volatile than PJ Electronics Co. It trades about 0.28 of its potential returns per unit of risk. PJ Electronics Co is currently generating about 0.39 per unit of risk. If you would invest 1,564,968 in Global Standard Technology on October 14, 2024 and sell it today you would earn a total of 257,032 from holding Global Standard Technology or generate 16.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Standard Technology vs. PJ Electronics Co
Performance |
| Timeline |
| Global Standard Tech |
| PJ Electronics |
Global Standard and PJ Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Standard and PJ Electronics
The main advantage of trading using opposite Global Standard and PJ Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Standard 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.| Global Standard vs. Ssangyong Materials Corp | Global Standard vs. Hotel Shilla Co | Global Standard vs. INNOX Advanced Materials | Global Standard vs. Hyundai Engineering Plastics |
| PJ Electronics vs. Seers Technology | PJ Electronics vs. Global Standard Technology | PJ Electronics vs. Seoul Semiconductor Co | PJ Electronics vs. Eugene Technology 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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