Correlation Between PJ Metal and Daedong Steel
Can any of the company-specific risk be diversified away by investing in both PJ Metal and Daedong Steel 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 Daedong Steel 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 Daedong Steel Co, you can compare the effects of market volatilities on PJ Metal and Daedong Steel 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 Daedong Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of PJ Metal and Daedong Steel.
Diversification Opportunities for PJ Metal and Daedong Steel
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 128660 and Daedong is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding PJ Metal Co and Daedong Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daedong Steel 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 Daedong Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daedong Steel has no effect on the direction of PJ Metal i.e., PJ Metal and Daedong Steel go up and down completely randomly.
Pair Corralation between PJ Metal and Daedong Steel
Assuming the 90 days trading horizon PJ Metal Co is expected to generate 0.84 times more return on investment than Daedong Steel. However, PJ Metal Co is 1.19 times less risky than Daedong Steel. It trades about -0.17 of its potential returns per unit of risk. Daedong Steel Co is currently generating about -0.16 per unit of risk. If you would invest 329,000 in PJ Metal Co on August 25, 2024 and sell it today you would lose (22,000) from holding PJ Metal Co or give up 6.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
PJ Metal Co vs. Daedong Steel Co
Performance |
| Timeline |
| PJ Metal |
| Daedong Steel |
PJ Metal and Daedong Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PJ Metal and Daedong Steel
The main advantage of trading using opposite PJ Metal and Daedong Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PJ Metal position performs unexpectedly, Daedong Steel 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 Daedong Steel will offset losses from the drop in Daedong Steel's long position.| PJ Metal vs. INNOX Advanced Materials | PJ Metal vs. Seoul Semiconductor Co | PJ Metal vs. Samhwa Paint Industrial | PJ Metal vs. MetaLabs Co |
| Daedong Steel vs. Global Standard Technology | Daedong Steel vs. Songwon Industrial Co | Daedong Steel vs. PJ Metal Co | Daedong Steel vs. Samhwa Paint Industrial |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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