Correlation Between PJ Metal and SungMoon Electronics
Can any of the company-specific risk be diversified away by investing in both PJ Metal and SungMoon 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 SungMoon 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 SungMoon Electronics Co, you can compare the effects of market volatilities on PJ Metal and SungMoon 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 SungMoon Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of PJ Metal and SungMoon Electronics.
Diversification Opportunities for PJ Metal and SungMoon Electronics
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 128660 and SungMoon is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding PJ Metal Co and SungMoon Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SungMoon 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 SungMoon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SungMoon Electronics has no effect on the direction of PJ Metal i.e., PJ Metal and SungMoon Electronics go up and down completely randomly.
Pair Corralation between PJ Metal and SungMoon Electronics
Assuming the 90 days trading horizon PJ Metal Co is expected to under-perform the SungMoon Electronics. But the stock apears to be less risky and, when comparing its historical volatility, PJ Metal Co is 4.63 times less risky than SungMoon Electronics. The stock trades about -0.02 of its potential returns per unit of risk. The SungMoon Electronics Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 107,300 in SungMoon Electronics Co on October 28, 2024 and sell it today you would earn a total of 9,000 from holding SungMoon Electronics Co or generate 8.39% 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. SungMoon Electronics Co
Performance |
| Timeline |
| PJ Metal |
| SungMoon Electronics |
PJ Metal and SungMoon Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PJ Metal and SungMoon Electronics
The main advantage of trading using opposite PJ Metal and SungMoon Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PJ Metal position performs unexpectedly, SungMoon 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 SungMoon Electronics will offset losses from the drop in SungMoon Electronics' long position.| PJ Metal vs. Keum Kang Steel | PJ Metal vs. Samhyun Steel Co | PJ Metal vs. Gyeongnam Steel Co | PJ Metal vs. Jeil Steel Mfg |
| SungMoon Electronics vs. KB Financial Group | SungMoon Electronics vs. Shinhan Financial Group | SungMoon Electronics vs. Hana Financial | SungMoon Electronics vs. Woori Financial Group |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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