Correlation Between PJ Metal and Xavis
Can any of the company-specific risk be diversified away by investing in both PJ Metal and Xavis 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 Xavis 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 Xavis Co, you can compare the effects of market volatilities on PJ Metal and Xavis 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 Xavis. Check out your portfolio center. Please also check ongoing floating volatility patterns of PJ Metal and Xavis.
Diversification Opportunities for PJ Metal and Xavis
Poor diversification
The 3 months correlation between 128660 and Xavis is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding PJ Metal Co and Xavis Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xavis 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 Xavis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xavis has no effect on the direction of PJ Metal i.e., PJ Metal and Xavis go up and down completely randomly.
Pair Corralation between PJ Metal and Xavis
Assuming the 90 days trading horizon PJ Metal Co is expected to under-perform the Xavis. But the stock apears to be less risky and, when comparing its historical volatility, PJ Metal Co is 5.23 times less risky than Xavis. The stock trades about -0.23 of its potential returns per unit of risk. The Xavis Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 137,600 in Xavis Co on November 5, 2024 and sell it today you would earn a total of 5,400 from holding Xavis Co or generate 3.92% 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. Xavis Co
Performance |
| Timeline |
| PJ Metal |
| Xavis |
PJ Metal and Xavis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PJ Metal and Xavis
The main advantage of trading using opposite PJ Metal and Xavis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PJ Metal position performs unexpectedly, Xavis 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 Xavis will offset losses from the drop in Xavis' long position.| PJ Metal vs. KyungIn Electronics Co | PJ Metal vs. Daewoo Electronic Components | PJ Metal vs. Samyoung Electronics Co | PJ Metal vs. ABCO Electronics Co |
| Xavis vs. Hanjin Transportation Co | Xavis vs. Innowireless Co | Xavis vs. Choil Aluminum | Xavis vs. Digital Power Communications |
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 Correlations module to find global opportunities by holding instruments from different markets.
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