Correlation Between PJ Metal and Wonil Special

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

Diversification Opportunities for PJ Metal and Wonil Special

0.76

Correlation Coefficient

PJ Metal  Wonil Special

Poor diversification

The 3 months correlation between 128660 and Wonil is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding PJ Metal Co and Wonil Special Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wonil Special 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 Wonil Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wonil Special Steel has no effect on the direction of PJ Metal i.e., PJ Metal and Wonil Special go up and down completely randomly.

Pair Corralation between PJ Metal and Wonil Special

Assuming the 90 days trading horizon PJ Metal Co is expected to generate 1.96 times more return on investment than Wonil Special. However, PJ Metal is 1.96 times more volatile than Wonil Special Steel. It trades about 0.08 of its potential returns per unit of risk. Wonil Special Steel is currently generating about 0.04 per unit of risk. If you would invest  286,435  in PJ Metal Co on November 29, 2024 and sell it today you would earn a total of  28,065  from holding PJ Metal Co or generate 9.8% return on investment over 90 days.

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

PJ Metal Co  vs.  Wonil Special Steel

PJ Metal

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PJ Metal Co are ranked lower than 6 (%) 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 March 2025.

Wonil Special Steel

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wonil Special Steel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Wonil Special is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PJ Metal and Wonil Special

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

The idea behind PJ Metal Co and Wonil Special 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.