Correlation Between PJ Metal and Digital Power
Can any of the company-specific risk be diversified away by investing in both PJ Metal and Digital Power 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 Digital Power 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 Digital Power Communications, you can compare the effects of market volatilities on PJ Metal and Digital Power 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 Digital Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of PJ Metal and Digital Power.
Diversification Opportunities for PJ Metal and Digital Power
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 128660 and Digital is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding PJ Metal Co and Digital Power Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Power Commun 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 Digital Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Power Commun has no effect on the direction of PJ Metal i.e., PJ Metal and Digital Power go up and down completely randomly.
Pair Corralation between PJ Metal and Digital Power
Assuming the 90 days trading horizon PJ Metal Co is expected to under-perform the Digital Power. In addition to that, PJ Metal is 1.19 times more volatile than Digital Power Communications. It trades about -0.17 of its total potential returns per unit of risk. Digital Power Communications is currently generating about 0.17 per unit of volatility. If you would invest 784,000 in Digital Power Communications on September 12, 2024 and sell it today you would earn a total of 68,000 from holding Digital Power Communications or generate 8.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PJ Metal Co vs. Digital Power Communications
Performance |
| Timeline |
| PJ Metal |
| Digital Power Commun |
PJ Metal and Digital Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PJ Metal and Digital Power
The main advantage of trading using opposite PJ Metal and Digital Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PJ Metal position performs unexpectedly, Digital Power 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 Digital Power will offset losses from the drop in Digital Power's long position.| PJ Metal vs. Dongwon Metal Co | PJ Metal vs. DONGKUK TED METAL | PJ Metal vs. BNK Financial Group | PJ Metal vs. KB Financial Group |
| Digital Power vs. Dongwon Metal Co | Digital Power vs. Samsung Publishing Co | Digital Power vs. Miwon Chemicals Co | Digital Power vs. PJ Metal 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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