Correlation Between PJ Metal and DB Financial
Can any of the company-specific risk be diversified away by investing in both PJ Metal and DB Financial 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 DB Financial 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 DB Financial Investment, you can compare the effects of market volatilities on PJ Metal and DB Financial 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 DB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of PJ Metal and DB Financial.
Diversification Opportunities for PJ Metal and DB Financial
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between 128660 and 016610 is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding PJ Metal Co and DB Financial Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DB Financial Investment 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 DB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DB Financial Investment has no effect on the direction of PJ Metal i.e., PJ Metal and DB Financial go up and down completely randomly.
Pair Corralation between PJ Metal and DB Financial
Assuming the 90 days trading horizon PJ Metal is expected to generate 2.2 times less return on investment than DB Financial. In addition to that, PJ Metal is 1.87 times more volatile than DB Financial Investment. It trades about 0.01 of its total potential returns per unit of risk. DB Financial Investment is currently generating about 0.03 per unit of volatility. If you would invest 422,523 in DB Financial Investment on August 27, 2024 and sell it today you would earn a total of 87,477 from holding DB Financial Investment or generate 20.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PJ Metal Co vs. DB Financial Investment
Performance |
| Timeline |
| PJ Metal |
| DB Financial Investment |
PJ Metal and DB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PJ Metal and DB Financial
The main advantage of trading using opposite PJ Metal and DB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PJ Metal position performs unexpectedly, DB Financial 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 DB Financial will offset losses from the drop in DB Financial's long position.| PJ Metal vs. iNtRON Biotechnology | PJ Metal vs. Lotte Chilsung Beverage | PJ Metal vs. Aprogen Healthcare Games | PJ Metal vs. Chorokbaem Healthcare Co |
| DB Financial vs. Innowireless Co | DB Financial vs. KyungIn Electronics Co | DB Financial vs. PJ Metal Co | DB Financial vs. Wireless Power Amplifier |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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