Correlation Between PJ Metal and JW Shinyak
Can any of the company-specific risk be diversified away by investing in both PJ Metal and JW Shinyak 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 JW Shinyak 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 JW Shinyak, you can compare the effects of market volatilities on PJ Metal and JW Shinyak 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 JW Shinyak. Check out your portfolio center. Please also check ongoing floating volatility patterns of PJ Metal and JW Shinyak.
Diversification Opportunities for PJ Metal and JW Shinyak
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 128660 and 067290 is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding PJ Metal Co and JW Shinyak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JW Shinyak 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 JW Shinyak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JW Shinyak has no effect on the direction of PJ Metal i.e., PJ Metal and JW Shinyak go up and down completely randomly.
Pair Corralation between PJ Metal and JW Shinyak
Assuming the 90 days trading horizon PJ Metal Co is expected to generate 0.76 times more return on investment than JW Shinyak. However, PJ Metal Co is 1.32 times less risky than JW Shinyak. It trades about -0.01 of its potential returns per unit of risk. JW Shinyak is currently generating about -0.01 per unit of risk. If you would invest 319,000 in PJ Metal Co on September 2, 2024 and sell it today you would lose (18,000) from holding PJ Metal Co or give up 5.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PJ Metal Co vs. JW Shinyak
Performance |
| Timeline |
| PJ Metal |
| JW Shinyak |
PJ Metal and JW Shinyak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PJ Metal and JW Shinyak
The main advantage of trading using opposite PJ Metal and JW Shinyak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PJ Metal position performs unexpectedly, JW Shinyak 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 JW Shinyak will offset losses from the drop in JW Shinyak's long position.| PJ Metal vs. Keum Kang Steel | PJ Metal vs. Tplex Co | PJ Metal vs. Jeil Steel Mfg | PJ Metal vs. Wonil Special Steel |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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