Correlation Between PJ Metal and Korea Real
Can any of the company-specific risk be diversified away by investing in both PJ Metal and Korea Real 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 Korea Real 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 Korea Real Estate, you can compare the effects of market volatilities on PJ Metal and Korea Real 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 Korea Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of PJ Metal and Korea Real.
Diversification Opportunities for PJ Metal and Korea Real
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between 128660 and Korea is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding PJ Metal Co and Korea Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Real Estate 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 Korea Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Real Estate has no effect on the direction of PJ Metal i.e., PJ Metal and Korea Real go up and down completely randomly.
Pair Corralation between PJ Metal and Korea Real
Assuming the 90 days trading horizon PJ Metal Co is expected to under-perform the Korea Real. In addition to that, PJ Metal is 2.77 times more volatile than Korea Real Estate. It trades about -0.14 of its total potential returns per unit of risk. Korea Real Estate is currently generating about -0.02 per unit of volatility. If you would invest 104,100 in Korea Real Estate on August 30, 2024 and sell it today you would lose (400.00) from holding Korea Real Estate or give up 0.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PJ Metal Co vs. Korea Real Estate
Performance |
| Timeline |
| PJ Metal |
| Korea Real Estate |
PJ Metal and Korea Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PJ Metal and Korea Real
The main advantage of trading using opposite PJ Metal and Korea Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PJ Metal position performs unexpectedly, Korea Real 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 Korea Real will offset losses from the drop in Korea Real's long position.The idea behind PJ Metal Co and Korea Real Estate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Korea Real vs. Incar Financial Service | Korea Real vs. Ni Steel | Korea Real vs. Hana Financial | Korea Real vs. Pureun Mutual Savings |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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