Correlation Between PJ Metal and SEOJEON ELECTRIC
Can any of the company-specific risk be diversified away by investing in both PJ Metal and SEOJEON ELECTRIC 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 SEOJEON ELECTRIC 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 SEOJEON ELECTRIC MACHINERY, you can compare the effects of market volatilities on PJ Metal and SEOJEON ELECTRIC 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 SEOJEON ELECTRIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of PJ Metal and SEOJEON ELECTRIC.
Diversification Opportunities for PJ Metal and SEOJEON ELECTRIC
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 128660 and SEOJEON is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding PJ Metal Co and SEOJEON ELECTRIC MACHINERY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEOJEON ELECTRIC MAC 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 SEOJEON ELECTRIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEOJEON ELECTRIC MAC has no effect on the direction of PJ Metal i.e., PJ Metal and SEOJEON ELECTRIC go up and down completely randomly.
Pair Corralation between PJ Metal and SEOJEON ELECTRIC
Assuming the 90 days trading horizon PJ Metal Co is expected to under-perform the SEOJEON ELECTRIC. But the stock apears to be less risky and, when comparing its historical volatility, PJ Metal Co is 11.83 times less risky than SEOJEON ELECTRIC. The stock trades about -0.23 of its potential returns per unit of risk. The SEOJEON ELECTRIC MACHINERY is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 402,000 in SEOJEON ELECTRIC MACHINERY on November 7, 2024 and sell it today you would earn a total of 72,500 from holding SEOJEON ELECTRIC MACHINERY or generate 18.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PJ Metal Co vs. SEOJEON ELECTRIC MACHINERY
Performance |
| Timeline |
| PJ Metal |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| SEOJEON ELECTRIC MAC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
PJ Metal and SEOJEON ELECTRIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PJ Metal and SEOJEON ELECTRIC
The main advantage of trading using opposite PJ Metal and SEOJEON ELECTRIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PJ Metal position performs unexpectedly, SEOJEON ELECTRIC 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 SEOJEON ELECTRIC will offset losses from the drop in SEOJEON ELECTRIC's long position.| PJ Metal vs. Dongnam Chemical Co | PJ Metal vs. Namhae Chemical | PJ Metal vs. Hansol Chemical Co | PJ Metal vs. Samsung Life Insurance |
| SEOJEON ELECTRIC vs. Koh Young Technology | SEOJEON ELECTRIC vs. Hana Financial | SEOJEON ELECTRIC vs. Samsung Securities |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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