Correlation Between PJ Metal and Moonbae Steel

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

Diversification Opportunities for PJ Metal and Moonbae Steel

0.16

Correlation Coefficient

PJ Metal  Moonbae Steel

Average diversification

The 3 months correlation between 128660 and Moonbae is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding PJ Metal Co and Moonbae Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moonbae Steel 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 Moonbae Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moonbae Steel has no effect on the direction of PJ Metal i.e., PJ Metal and Moonbae Steel go up and down completely randomly.

Pair Corralation between PJ Metal and Moonbae Steel

Assuming the 90 days trading horizon PJ Metal Co is expected to generate 1.44 times more return on investment than Moonbae Steel. However, PJ Metal is 1.44 times more volatile than Moonbae Steel. It trades about 0.01 of its potential returns per unit of risk. Moonbae Steel is currently generating about -0.01 per unit of risk. If you would invest  319,742  in PJ Metal Co on December 7, 2024 and sell it today you would lose (6,742) from holding PJ Metal Co or give up 2.11% of portfolio value over 90 days.

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

PJ Metal Co  vs.  Moonbae Steel

PJ Metal

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PJ Metal Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, PJ Metal sustained solid returns over the last few months and may actually be approaching a breakup point.

Moonbae Steel

Risk-Adjusted Performance

Good

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

Pair Trading with PJ Metal and Moonbae Steel

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

The idea behind PJ Metal Co and Moonbae Steel 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.