Correlation Between PJ Electronics and Dongil Metal

Can any of the company-specific risk be diversified away by investing in both PJ Electronics and Dongil 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 PJ Electronics and Dongil Metal 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 Dongil Metal Co, you can compare the effects of market volatilities on PJ Electronics and Dongil 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 PJ Electronics with a short position of Dongil Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of PJ Electronics and Dongil Metal.

Diversification Opportunities for PJ Electronics and Dongil Metal

0.52

Correlation Coefficient

PJ Electronics  Dongil Metal

Very weak diversification

The 3 months correlation between 006140 and Dongil is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding PJ Electronics Co and Dongil Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongil 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 Dongil Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongil Metal has no effect on the direction of PJ Electronics i.e., PJ Electronics and Dongil Metal go up and down completely randomly.

Pair Corralation between PJ Electronics and Dongil Metal

Assuming the 90 days trading horizon PJ Electronics Co is expected to generate 1.18 times more return on investment than Dongil Metal. However, PJ Electronics is 1.18 times more volatile than Dongil Metal Co. It trades about 0.18 of its potential returns per unit of risk. Dongil Metal Co is currently generating about 0.06 per unit of risk. If you would invest  444,500  in PJ Electronics Co on December 25, 2024 and sell it today you would earn a total of  128,500  from holding PJ Electronics Co or generate 28.91% return on investment over 90 days.

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

PJ Electronics Co  vs.  Dongil Metal Co

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 14 (%) 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.

Dongil Metal

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dongil Metal Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dongil Metal may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with PJ Electronics and Dongil Metal

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

The idea behind PJ Electronics Co and Dongil Metal Co 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.