Correlation Between PJ Metal and Macromill Embrain
Can any of the company-specific risk be diversified away by investing in both PJ Metal and Macromill Embrain 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 Macromill Embrain 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 Macromill Embrain Co, you can compare the effects of market volatilities on PJ Metal and Macromill Embrain 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 Macromill Embrain. Check out your portfolio center. Please also check ongoing floating volatility patterns of PJ Metal and Macromill Embrain.
Diversification Opportunities for PJ Metal and Macromill Embrain
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 128660 and Macromill is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding PJ Metal Co and Macromill Embrain Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macromill Embrain 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 Macromill Embrain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macromill Embrain has no effect on the direction of PJ Metal i.e., PJ Metal and Macromill Embrain go up and down completely randomly.
Pair Corralation between PJ Metal and Macromill Embrain
Assuming the 90 days trading horizon PJ Metal Co is expected to generate 1.39 times more return on investment than Macromill Embrain. However, PJ Metal is 1.39 times more volatile than Macromill Embrain Co. It trades about -0.15 of its potential returns per unit of risk. Macromill Embrain Co is currently generating about -0.33 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PJ Metal Co vs. Macromill Embrain Co
Performance |
| Timeline |
| PJ Metal |
| Macromill Embrain |
PJ Metal and Macromill Embrain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PJ Metal and Macromill Embrain
The main advantage of trading using opposite PJ Metal and Macromill Embrain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PJ Metal position performs unexpectedly, Macromill Embrain 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 Macromill Embrain will offset losses from the drop in Macromill Embrain'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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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