Correlation Between Cheryong Industrial and PJ Metal
Can any of the company-specific risk be diversified away by investing in both Cheryong Industrial and PJ Metal 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 Cheryong Industrial and PJ Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheryong Industrial CoLtd and PJ Metal Co, you can compare the effects of market volatilities on Cheryong Industrial and PJ Metal 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 Cheryong Industrial with a short position of PJ Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheryong Industrial and PJ Metal.
Diversification Opportunities for Cheryong Industrial and PJ Metal
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cheryong and 128660 is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Cheryong Industrial CoLtd and PJ Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJ Metal and Cheryong Industrial 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 Cheryong Industrial CoLtd are associated (or correlated) with PJ Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJ Metal has no effect on the direction of Cheryong Industrial i.e., Cheryong Industrial and PJ Metal go up and down completely randomly.
Pair Corralation between Cheryong Industrial and PJ Metal
Assuming the 90 days trading horizon Cheryong Industrial CoLtd is expected to under-perform the PJ Metal. In addition to that, Cheryong Industrial is 1.98 times more volatile than PJ Metal Co. It trades about -0.09 of its total potential returns per unit of risk. PJ Metal Co is currently generating about -0.16 per unit of volatility. If you would invest 327,000 in PJ Metal Co on August 28, 2024 and sell it today you would lose (20,000) from holding PJ Metal Co or give up 6.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheryong Industrial CoLtd vs. PJ Metal Co
Performance |
| Timeline |
| Cheryong Industrial CoLtd |
| PJ Metal |
Cheryong Industrial and PJ Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheryong Industrial and PJ Metal
The main advantage of trading using opposite Cheryong Industrial and PJ Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheryong Industrial position performs unexpectedly, PJ Metal 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 PJ Metal will offset losses from the drop in PJ Metal's long position.| Cheryong Industrial vs. iNtRON Biotechnology | Cheryong Industrial vs. Samsung Life Insurance | Cheryong Industrial vs. InfoBank | Cheryong Industrial vs. Lotte Chilsung Beverage |
| PJ Metal vs. Keum Kang Steel | PJ Metal vs. Tplex Co | PJ Metal vs. Samhyun Steel Co | PJ Metal vs. Wonil Special Steel |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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