Correlation Between Seoam Machinery and PJ Metal
Can any of the company-specific risk be diversified away by investing in both Seoam Machinery 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 Seoam Machinery and PJ Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seoam Machinery Industry and PJ Metal Co, you can compare the effects of market volatilities on Seoam Machinery 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 Seoam Machinery with a short position of PJ Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoam Machinery and PJ Metal.
Diversification Opportunities for Seoam Machinery and PJ Metal
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Seoam and 128660 is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Seoam Machinery Industry and PJ Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJ Metal and Seoam Machinery 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 Seoam Machinery Industry 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 Seoam Machinery i.e., Seoam Machinery and PJ Metal go up and down completely randomly.
Pair Corralation between Seoam Machinery and PJ Metal
Assuming the 90 days trading horizon Seoam Machinery Industry is expected to under-perform the PJ Metal. But the stock apears to be less risky and, when comparing its historical volatility, Seoam Machinery Industry is 1.03 times less risky than PJ Metal. The stock trades about -0.04 of its potential returns per unit of risk. The PJ Metal Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 303,000 in PJ Metal Co on September 12, 2024 and sell it today you would lose (18,500) from holding PJ Metal Co or give up 6.11% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Seoam Machinery Industry vs. PJ Metal Co
Performance |
Timeline |
Seoam Machinery Industry |
PJ Metal |
Seoam Machinery and PJ Metal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Seoam Machinery and PJ Metal
The main advantage of trading using opposite Seoam Machinery and PJ Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoam Machinery 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.Seoam Machinery vs. Rainbow Robotics | Seoam Machinery vs. COWINTECH Co | Seoam Machinery vs. CS BEARING CoLtd | Seoam Machinery vs. Young Poong Precision |
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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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