Correlation Between PJ Metal and Busan Industrial
Can any of the company-specific risk be diversified away by investing in both PJ Metal and Busan Industrial 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 Busan Industrial 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 Busan Industrial Co, you can compare the effects of market volatilities on PJ Metal and Busan Industrial 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 Busan Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of PJ Metal and Busan Industrial.
Diversification Opportunities for PJ Metal and Busan Industrial
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 128660 and Busan is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding PJ Metal Co and Busan Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Industrial 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 Busan Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Busan Industrial has no effect on the direction of PJ Metal i.e., PJ Metal and Busan Industrial go up and down completely randomly.
Pair Corralation between PJ Metal and Busan Industrial
Assuming the 90 days trading horizon PJ Metal is expected to generate 1.42 times less return on investment than Busan Industrial. But when comparing it to its historical volatility, PJ Metal Co is 1.01 times less risky than Busan Industrial. It trades about 0.01 of its potential returns per unit of risk. Busan Industrial Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 7,316,210 in Busan Industrial Co on November 19, 2024 and sell it today you would earn a total of 173,790 from holding Busan Industrial Co or generate 2.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PJ Metal Co vs. Busan Industrial Co
Performance |
| Timeline |
| PJ Metal |
| Busan Industrial |
PJ Metal and Busan Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PJ Metal and Busan Industrial
The main advantage of trading using opposite PJ Metal and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PJ Metal position performs unexpectedly, Busan Industrial 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 Busan Industrial will offset losses from the drop in Busan Industrial's long position.| PJ Metal vs. Adaptive Plasma Technology | PJ Metal vs. Formetal Co | PJ Metal vs. Puloon Technology | PJ Metal vs. Guyoung Technology Co |
| Busan Industrial vs. DC Media Co | Busan Industrial vs. Nice Information Telecommunication | Busan Industrial vs. SKONEC Entertainment Co | Busan Industrial vs. Kisan Telecom 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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