Correlation Between PJ Metal and PI Advanced
Can any of the company-specific risk be diversified away by investing in both PJ Metal and PI Advanced 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 PI Advanced 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 PI Advanced Materials, you can compare the effects of market volatilities on PJ Metal and PI Advanced 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 PI Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of PJ Metal and PI Advanced.
Diversification Opportunities for PJ Metal and PI Advanced
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 128660 and 178920 is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding PJ Metal Co and PI Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PI Advanced Materials 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 PI Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PI Advanced Materials has no effect on the direction of PJ Metal i.e., PJ Metal and PI Advanced go up and down completely randomly.
Pair Corralation between PJ Metal and PI Advanced
Assuming the 90 days trading horizon PJ Metal Co is expected to generate 1.12 times more return on investment than PI Advanced. However, PJ Metal is 1.12 times more volatile than PI Advanced Materials. It trades about 0.02 of its potential returns per unit of risk. PI Advanced Materials is currently generating about -0.13 per unit of risk. If you would invest 301,000 in PJ Metal Co on September 13, 2024 and sell it today you would lose (1,500) from holding PJ Metal Co or give up 0.5% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
PJ Metal Co vs. PI Advanced Materials
Performance |
Timeline |
PJ Metal |
PI Advanced Materials |
PJ Metal and PI Advanced Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PJ Metal and PI Advanced
The main advantage of trading using opposite PJ Metal and PI Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PJ Metal position performs unexpectedly, PI Advanced 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 PI Advanced will offset losses from the drop in PI Advanced's long position.PJ Metal vs. Keum Kang Steel | PJ Metal vs. Samhyun Steel Co | PJ Metal vs. Gyeongnam Steel Co | PJ Metal vs. Jeil Steel Mfg |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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