Correlation Between Korea Refract and PJ Metal

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

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

Diversification Opportunities for Korea Refract and PJ Metal

0.38

Correlation Coefficient

Korea Refract  PJ Metal

Weak diversification

The 3 months correlation between Korea and 128660 is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Korea Refract and PJ Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJ Metal and Korea Refract 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 Korea Refract 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 Korea Refract i.e., Korea Refract and PJ Metal go up and down completely randomly.

Pair Corralation between Korea Refract and PJ Metal

Assuming the 90 days trading horizon Korea Refract is expected to generate 2.15 times less return on investment than PJ Metal. But when comparing it to its historical volatility, Korea Refract is 1.25 times less risky than PJ Metal. It trades about 0.06 of its potential returns per unit of risk. PJ Metal Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  295,000  in PJ Metal Co on December 25, 2024 and sell it today you would earn a total of  22,500  from holding PJ Metal Co or generate 7.63% return on investment over 90 days.

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

Korea Refract  vs.  PJ Metal Co

Korea Refract

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Korea Refract are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Korea Refract is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

PJ Metal

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PJ Metal Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, PJ Metal may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Korea Refract and PJ Metal

The main advantage of trading using opposite Korea Refract and PJ Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Refract 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.

The idea behind Korea Refract and PJ 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .