Correlation Between PJ Electronics and Duksan Hi

Can any of the company-specific risk be diversified away by investing in both PJ Electronics and Duksan Hi 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 Electronics and Duksan Hi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PJ Electronics Co and Duksan Hi Metal, you can compare the effects of market volatilities on PJ Electronics and Duksan Hi 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 Electronics with a short position of Duksan Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of PJ Electronics and Duksan Hi.

Diversification Opportunities for PJ Electronics and Duksan Hi

0.63

Correlation Coefficient

PJ Electronics  Duksan Hi

Poor diversification

The 3 months correlation between 006140 and Duksan is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding PJ Electronics Co and Duksan Hi Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duksan Hi Metal and PJ Electronics 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 Electronics Co are associated (or correlated) with Duksan Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duksan Hi Metal has no effect on the direction of PJ Electronics i.e., PJ Electronics and Duksan Hi go up and down completely randomly.

Pair Corralation between PJ Electronics and Duksan Hi

Assuming the 90 days trading horizon PJ Electronics Co is expected to generate 1.02 times more return on investment than Duksan Hi. However, PJ Electronics is 1.02 times more volatile than Duksan Hi Metal. It trades about 0.17 of its potential returns per unit of risk. Duksan Hi Metal is currently generating about 0.13 per unit of risk. If you would invest  448,395  in PJ Electronics Co on December 24, 2024 and sell it today you would earn a total of  118,605  from holding PJ Electronics Co or generate 26.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

PJ Electronics Co  vs.  Duksan Hi Metal

PJ Electronics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PJ Electronics Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, PJ Electronics sustained solid returns over the last few months and may actually be approaching a breakup point.

Duksan Hi Metal

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Duksan Hi Metal are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Duksan Hi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PJ Electronics and Duksan Hi

The main advantage of trading using opposite PJ Electronics and Duksan Hi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PJ Electronics position performs unexpectedly, Duksan Hi 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 Duksan Hi will offset losses from the drop in Duksan Hi's long position.

The idea behind PJ Electronics Co and Duksan Hi Metal pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.