Correlation Between PJ Metal and EV Advanced
Can any of the company-specific risk be diversified away by investing in both PJ Metal and EV Advanced 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 EV Advanced 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 EV Advanced Material, you can compare the effects of market volatilities on PJ Metal and EV Advanced 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 EV Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of PJ Metal and EV Advanced.
Diversification Opportunities for PJ Metal and EV Advanced
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 128660 and 131400 is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding PJ Metal Co and EV Advanced Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EV Advanced Material 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 EV Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EV Advanced Material has no effect on the direction of PJ Metal i.e., PJ Metal and EV Advanced go up and down completely randomly.
Pair Corralation between PJ Metal and EV Advanced
Assuming the 90 days trading horizon PJ Metal Co is expected to generate 0.57 times more return on investment than EV Advanced. However, PJ Metal Co is 1.76 times less risky than EV Advanced. It trades about -0.17 of its potential returns per unit of risk. EV Advanced Material is currently generating about -0.13 per unit of risk. If you would invest 318,500 in PJ Metal Co on September 12, 2024 and sell it today you would lose (34,000) from holding PJ Metal Co or give up 10.68% 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. EV Advanced Material
Performance |
| Timeline |
| PJ Metal |
| EV Advanced Material |
PJ Metal and EV Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PJ Metal and EV Advanced
The main advantage of trading using opposite PJ Metal and EV Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PJ Metal position performs unexpectedly, EV Advanced 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 EV Advanced will offset losses from the drop in EV Advanced's long position.| PJ Metal vs. Dongwon Metal Co | PJ Metal vs. DONGKUK TED METAL | PJ Metal vs. BNK Financial Group | PJ Metal vs. KB Financial Group |
| EV Advanced vs. Cube Entertainment | EV Advanced vs. Dreamus Company | EV Advanced vs. LG Energy Solution | EV Advanced vs. Dongwon System |
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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