Correlation Between Settlebank and PJ Electronics
Can any of the company-specific risk be diversified away by investing in both Settlebank 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 Settlebank and PJ Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Settlebank and PJ Electronics Co, you can compare the effects of market volatilities on Settlebank 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 Settlebank with a short position of PJ Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Settlebank and PJ Electronics.
Diversification Opportunities for Settlebank and PJ Electronics
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Settlebank and 006140 is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Settlebank and PJ Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJ Electronics and Settlebank 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 Settlebank 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 Settlebank i.e., Settlebank and PJ Electronics go up and down completely randomly.
Pair Corralation between Settlebank and PJ Electronics
Assuming the 90 days trading horizon Settlebank is expected to under-perform the PJ Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Settlebank is 1.0 times less risky than PJ Electronics. The stock trades about -0.02 of its potential returns per unit of risk. The PJ Electronics Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 575,036 in PJ Electronics Co on September 3, 2024 and sell it today you would lose (121,536) from holding PJ Electronics Co or give up 21.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Settlebank vs. PJ Electronics Co
Performance |
| Timeline |
| Settlebank |
| PJ Electronics |
Settlebank and PJ Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Settlebank and PJ Electronics
The main advantage of trading using opposite Settlebank and PJ Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Settlebank 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.| Settlebank vs. Cafe24 Corp | Settlebank vs. Korea Computer Systems | Settlebank vs. Daishin Information Communications | Settlebank vs. SSR Inc |
| PJ Electronics vs. Daejoo Electronic Materials | PJ Electronics vs. Parksystems Corp | PJ Electronics vs. BH Co | PJ Electronics vs. Partron Co |
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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