Correlation Between PI Advanced and PJ Electronics
Can any of the company-specific risk be diversified away by investing in both PI Advanced and PJ Electronics 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 PI Advanced and PJ Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PI Advanced Materials and PJ Electronics Co, you can compare the effects of market volatilities on PI Advanced and PJ Electronics 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 PI Advanced with a short position of PJ Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of PI Advanced and PJ Electronics.
Diversification Opportunities for PI Advanced and PJ Electronics
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 178920 and 006140 is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding PI Advanced Materials and PJ Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJ Electronics and PI Advanced 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 PI Advanced Materials are associated (or correlated) with PJ Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJ Electronics has no effect on the direction of PI Advanced i.e., PI Advanced and PJ Electronics go up and down completely randomly.
Pair Corralation between PI Advanced and PJ Electronics
Assuming the 90 days trading horizon PI Advanced Materials is expected to under-perform the PJ Electronics. In addition to that, PI Advanced is 1.26 times more volatile than PJ Electronics Co. It trades about -0.02 of its total potential returns per unit of risk. PJ Electronics Co is currently generating about -0.02 per unit of volatility. If you would invest 779,234 in PJ Electronics Co on November 5, 2024 and sell it today you would lose (249,234) from holding PJ Electronics Co or give up 31.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PI Advanced Materials vs. PJ Electronics Co
Performance |
| Timeline |
| PI Advanced Materials |
| PJ Electronics |
PI Advanced and PJ Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PI Advanced and PJ Electronics
The main advantage of trading using opposite PI Advanced and PJ Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PI Advanced position performs unexpectedly, PJ Electronics 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 Electronics will offset losses from the drop in PJ Electronics' long position.| PI Advanced vs. Ssangyong Information Communication | PI Advanced vs. Jahwa Electronics Co | PI Advanced vs. Korea Electronic Certification | PI Advanced vs. Samsung Electronics Co |
| PJ Electronics vs. Sejong Telecom | PJ Electronics vs. Alton Sports CoLtd | PJ Electronics vs. PlayD Co | PJ Electronics vs. Daishin Information 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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