Correlation Between PJ Metal and Samsung Special

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

Diversification Opportunities for PJ Metal and Samsung Special

0.53
  Correlation Coefficient

Very weak diversification

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

Pair Corralation between PJ Metal and Samsung Special

Assuming the 90 days trading horizon PJ Metal Co is expected to generate 0.98 times more return on investment than Samsung Special. However, PJ Metal Co is 1.02 times less risky than Samsung Special. It trades about -0.03 of its potential returns per unit of risk. Samsung Special Purpose is currently generating about -0.06 per unit of risk. If you would invest  290,500  in PJ Metal Co on September 11, 2024 and sell it today you would lose (27,000) from holding PJ Metal Co or give up 9.29% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

PJ Metal Co  vs.  Samsung Special Purpose

 Performance 
       Timeline  
PJ Metal 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days PJ Metal Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Samsung Special Purpose 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Samsung Special Purpose has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

PJ Metal and Samsung Special Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PJ Metal and Samsung Special

The main advantage of trading using opposite PJ Metal and Samsung Special positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PJ Metal position performs unexpectedly, Samsung 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 Samsung Special will offset losses from the drop in Samsung Special's long position.
The idea behind PJ Metal Co and Samsung Special Purpose 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.
Check out your portfolio center.
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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