Correlation Between PJ Metal and Kwang Jin
Can any of the company-specific risk be diversified away by investing in both PJ Metal and Kwang Jin 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 Kwang Jin 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 Kwang Jin Ind, you can compare the effects of market volatilities on PJ Metal and Kwang Jin 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 Kwang Jin. Check out your portfolio center. Please also check ongoing floating volatility patterns of PJ Metal and Kwang Jin.
Diversification Opportunities for PJ Metal and Kwang Jin
Very weak diversification
The 3 months correlation between 128660 and Kwang is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding PJ Metal Co and Kwang Jin Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kwang Jin Ind 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 Kwang Jin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kwang Jin Ind has no effect on the direction of PJ Metal i.e., PJ Metal and Kwang Jin go up and down completely randomly.
Pair Corralation between PJ Metal and Kwang Jin
Assuming the 90 days trading horizon PJ Metal Co is expected to generate 0.79 times more return on investment than Kwang Jin. However, PJ Metal Co is 1.26 times less risky than Kwang Jin. It trades about -0.04 of its potential returns per unit of risk. Kwang Jin Ind is currently generating about -0.07 per unit of risk. If you would invest 374,000 in PJ Metal Co on September 19, 2024 and sell it today you would lose (70,000) from holding PJ Metal Co or give up 18.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.18% |
| Values | Daily Returns |
PJ Metal Co vs. Kwang Jin Ind
Performance |
| Timeline |
| PJ Metal |
| Kwang Jin Ind |
PJ Metal and Kwang Jin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PJ Metal and Kwang Jin
The main advantage of trading using opposite PJ Metal and Kwang Jin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PJ Metal position performs unexpectedly, Kwang Jin 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 Kwang Jin will offset losses from the drop in Kwang Jin's long position.| PJ Metal vs. Seoul Electronics Telecom | PJ Metal vs. Kisan Telecom Co | PJ Metal vs. FOODWELL Co | PJ Metal vs. Sempio Foods Co |
| Kwang Jin vs. SK Telecom Co | Kwang Jin vs. Korea Information Communications | Kwang Jin vs. Hansol Homedeco Co | Kwang Jin vs. Kukil 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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