Correlation Between PJ Metal and PJ Electronics
Can any of the company-specific risk be diversified away by investing in both PJ Metal 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 PJ Metal and PJ Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PJ Metal Co and PJ Electronics Co, you can compare the effects of market volatilities on PJ Metal 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 PJ Metal with a short position of PJ Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of PJ Metal and PJ Electronics.
Diversification Opportunities for PJ Metal and PJ Electronics
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 128660 and 006140 is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding PJ Metal 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 PJ Metal 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 PJ Metal 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 PJ Metal i.e., PJ Metal and PJ Electronics go up and down completely randomly.
Pair Corralation between PJ Metal and PJ Electronics
Assuming the 90 days trading horizon PJ Metal Co is expected to generate 1.21 times more return on investment than PJ Electronics. However, PJ Metal is 1.21 times more volatile than PJ Electronics Co. It trades about 0.01 of its potential returns per unit of risk. PJ Electronics Co is currently generating about -0.02 per unit of risk. If you would invest 334,963 in PJ Metal Co on November 5, 2024 and sell it today you would lose (36,463) from holding PJ Metal Co or give up 10.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PJ Metal Co vs. PJ Electronics Co
Performance |
| Timeline |
| PJ Metal |
| PJ Electronics |
PJ Metal and PJ Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PJ Metal and PJ Electronics
The main advantage of trading using opposite PJ Metal and PJ Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PJ Metal 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.| PJ Metal vs. Lotte Non Life Insurance | PJ Metal vs. Daishin Information Communications | PJ Metal vs. Samlip General Foods | PJ Metal vs. Haitai Confectionery Foods |
| PJ Electronics vs. Sejong Telecom | PJ Electronics vs. Alton Sports CoLtd | PJ Electronics vs. PlayD Co | PJ Electronics vs. Daishin Information Communications |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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