Correlation Between PJ Metal and I Components

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

Diversification Opportunities for PJ Metal and I Components

0.53

Correlation Coefficient

PJ Metal  I Components

Very weak diversification

The 3 months correlation between 128660 and 059100 is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding PJ Metal Co and i Components Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on i Components 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 I Components. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of i Components has no effect on the direction of PJ Metal i.e., PJ Metal and I Components go up and down completely randomly.

Pair Corralation between PJ Metal and I Components

Assuming the 90 days trading horizon PJ Metal is expected to generate 1.05 times less return on investment than I Components. But when comparing it to its historical volatility, PJ Metal Co is 1.16 times less risky than I Components. It trades about 0.1 of its potential returns per unit of risk. i Components Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  470,500  in i Components Co on December 25, 2024 and sell it today you would earn a total of  37,500  from holding i Components Co or generate 7.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.25%
Values	Daily Returns

PJ Metal Co  vs.  i Components Co

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.

i Components

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in i Components Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, I Components may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with PJ Metal and I Components

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

The idea behind PJ Metal Co and i Components 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.