Correlation Between Jinro Distillers and PJ Electronics

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

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

Diversification Opportunities for Jinro Distillers and PJ Electronics

0.79

Correlation Coefficient

Jinro Distillers  PJ Electronics

Poor diversification

The 3 months correlation between Jinro and 006140 is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Jinro Distillers Co and PJ Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJ Electronics and Jinro Distillers 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 Jinro Distillers Co are associated (or correlated) with PJ Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJ Electronics has no effect on the direction of Jinro Distillers i.e., Jinro Distillers and PJ Electronics go up and down completely randomly.

Pair Corralation between Jinro Distillers and PJ Electronics

Assuming the 90 days trading horizon Jinro Distillers is expected to generate 17.81 times less return on investment than PJ Electronics. But when comparing it to its historical volatility, Jinro Distillers Co is 2.96 times less risky than PJ Electronics. It trades about 0.01 of its potential returns per unit of risk. PJ Electronics Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  486,857  in PJ Electronics Co on October 25, 2024 and sell it today you would earn a total of  39,143  from holding PJ Electronics Co or generate 8.04% return on investment over 90 days.

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

Jinro Distillers Co  vs.  PJ Electronics Co

Jinro Distillers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jinro Distillers Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Jinro Distillers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

PJ Electronics

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Jinro Distillers and PJ Electronics

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

The idea behind Jinro Distillers Co and PJ Electronics 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.