Correlation Between PJ Metal and Kukdong Oil
Can any of the company-specific risk be diversified away by investing in both PJ Metal and Kukdong Oil 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 Kukdong Oil 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 Kukdong Oil Chemicals, you can compare the effects of market volatilities on PJ Metal and Kukdong Oil 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 Kukdong Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of PJ Metal and Kukdong Oil.
Diversification Opportunities for PJ Metal and Kukdong Oil
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 128660 and Kukdong is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding PJ Metal Co and Kukdong Oil Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukdong Oil Chemicals 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 Kukdong Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kukdong Oil Chemicals has no effect on the direction of PJ Metal i.e., PJ Metal and Kukdong Oil go up and down completely randomly.
Pair Corralation between PJ Metal and Kukdong Oil
Assuming the 90 days trading horizon PJ Metal Co is expected to under-perform the Kukdong Oil. In addition to that, PJ Metal is 2.26 times more volatile than Kukdong Oil Chemicals. It trades about -0.24 of its total potential returns per unit of risk. Kukdong Oil Chemicals is currently generating about -0.35 per unit of volatility. If you would invest 402,500 in Kukdong Oil Chemicals on September 3, 2024 and sell it today you would lose (44,500) from holding Kukdong Oil Chemicals or give up 11.06% 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. Kukdong Oil Chemicals
Performance |
| Timeline |
| PJ Metal |
| Kukdong Oil Chemicals |
PJ Metal and Kukdong Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PJ Metal and Kukdong Oil
The main advantage of trading using opposite PJ Metal and Kukdong Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PJ Metal position performs unexpectedly, Kukdong Oil 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 Kukdong Oil will offset losses from the drop in Kukdong Oil's long position.| PJ Metal vs. Keum Kang Steel | PJ Metal vs. Tplex Co | PJ Metal vs. Gyeongnam Steel Co | PJ Metal vs. Jeil Steel Mfg |
| Kukdong Oil vs. PJ Metal Co | Kukdong Oil vs. Homecast CoLtd | Kukdong Oil vs. Sungmoon Electronics Co | Kukdong Oil vs. LG Electronics |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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