Correlation Between PJ Metal and Kukdo Chemical
Can any of the company-specific risk be diversified away by investing in both PJ Metal and Kukdo Chemical 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 Kukdo Chemical 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 Kukdo Chemical Co, you can compare the effects of market volatilities on PJ Metal and Kukdo Chemical 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 Kukdo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of PJ Metal and Kukdo Chemical.
Diversification Opportunities for PJ Metal and Kukdo Chemical
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 128660 and Kukdo is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding PJ Metal Co and Kukdo Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukdo Chemical 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 Kukdo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kukdo Chemical has no effect on the direction of PJ Metal i.e., PJ Metal and Kukdo Chemical go up and down completely randomly.
Pair Corralation between PJ Metal and Kukdo Chemical
Assuming the 90 days trading horizon PJ Metal is expected to generate 2.08 times less return on investment than Kukdo Chemical. But when comparing it to its historical volatility, PJ Metal Co is 2.66 times less risky than Kukdo Chemical. It trades about 0.32 of its potential returns per unit of risk. Kukdo Chemical Co is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,750,000 in Kukdo Chemical Co on October 12, 2024 and sell it today you would earn a total of 350,000 from holding Kukdo Chemical Co or generate 12.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PJ Metal Co vs. Kukdo Chemical Co
Performance |
| Timeline |
| PJ Metal |
| Kukdo Chemical |
PJ Metal and Kukdo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PJ Metal and Kukdo Chemical
The main advantage of trading using opposite PJ Metal and Kukdo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PJ Metal position performs unexpectedly, Kukdo Chemical 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 Kukdo Chemical will offset losses from the drop in Kukdo Chemical's long position.| PJ Metal vs. KakaoBank Corp | PJ Metal vs. Kbi Metal Co | PJ Metal vs. Jb Financial | PJ Metal vs. KB Financial Group |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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