Correlation Between Sewoon Medical and PJ Electronics
Can any of the company-specific risk be diversified away by investing in both Sewoon Medical 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 Sewoon Medical and PJ Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sewoon Medical Co and PJ Electronics Co, you can compare the effects of market volatilities on Sewoon Medical 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 Sewoon Medical with a short position of PJ Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sewoon Medical and PJ Electronics.
Diversification Opportunities for Sewoon Medical and PJ Electronics
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sewoon and 006140 is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sewoon Medical Co and PJ Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJ Electronics and Sewoon Medical 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 Sewoon Medical Co 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 Sewoon Medical i.e., Sewoon Medical and PJ Electronics go up and down completely randomly.
Pair Corralation between Sewoon Medical and PJ Electronics
Assuming the 90 days trading horizon Sewoon Medical Co is expected to under-perform the PJ Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Sewoon Medical Co is 2.91 times less risky than PJ Electronics. The stock trades about -0.28 of its potential returns per unit of risk. The PJ Electronics Co is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 488,500 in PJ Electronics Co on November 5, 2024 and sell it today you would earn a total of 41,500 from holding PJ Electronics Co or generate 8.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sewoon Medical Co vs. PJ Electronics Co
Performance |
| Timeline |
| Sewoon Medical |
| PJ Electronics |
Sewoon Medical and PJ Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sewoon Medical and PJ Electronics
The main advantage of trading using opposite Sewoon Medical and PJ Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sewoon Medical 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.| Sewoon Medical vs. Samsung Electronics Co | Sewoon Medical vs. Samsung Electronics Co | Sewoon Medical vs. KB Financial Group | Sewoon Medical vs. Shinhan Financial Group |
| PJ Electronics vs. ABCO Electronics Co | PJ Electronics vs. Hannong Chemicals | PJ Electronics vs. Anam Electronics Co | PJ Electronics vs. Sungmoon Electronics Co |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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