Correlation Between PJ Metal and Nam Hwa
Can any of the company-specific risk be diversified away by investing in both PJ Metal and Nam Hwa 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 Nam Hwa 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 Nam Hwa Construction, you can compare the effects of market volatilities on PJ Metal and Nam Hwa 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 Nam Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of PJ Metal and Nam Hwa.
Diversification Opportunities for PJ Metal and Nam Hwa
Good diversification
The 3 months correlation between 128660 and Nam is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding PJ Metal Co and Nam Hwa Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nam Hwa Construction 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 Nam Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nam Hwa Construction has no effect on the direction of PJ Metal i.e., PJ Metal and Nam Hwa go up and down completely randomly.
Pair Corralation between PJ Metal and Nam Hwa
Assuming the 90 days trading horizon PJ Metal Co is expected to generate 0.5 times more return on investment than Nam Hwa. However, PJ Metal Co is 1.98 times less risky than Nam Hwa. It trades about 0.32 of its potential returns per unit of risk. Nam Hwa Construction is currently generating about -0.1 per unit of risk. If you would invest 285,008 in PJ Metal Co on October 12, 2024 and sell it today you would earn a total of 16,992 from holding PJ Metal Co or generate 5.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PJ Metal Co vs. Nam Hwa Construction
Performance |
| Timeline |
| PJ Metal |
| Nam Hwa Construction |
PJ Metal and Nam Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PJ Metal and Nam Hwa
The main advantage of trading using opposite PJ Metal and Nam Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PJ Metal position performs unexpectedly, Nam Hwa 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 Nam Hwa will offset losses from the drop in Nam Hwa's long position.| PJ Metal vs. Alton Sports CoLtd | PJ Metal vs. PlayD Co | PJ Metal vs. Kbi Metal Co | PJ Metal vs. Shinhan Inverse Copper |
| Nam Hwa vs. PI Advanced Materials | Nam Hwa vs. Solus Advanced Materials | Nam Hwa vs. Daejoo Electronic Materials | Nam Hwa 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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