Correlation Between PJ Metal and Hyosung Heavy

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

Diversification Opportunities for PJ Metal and Hyosung Heavy

0.24

Correlation Coefficient

PJ Metal  Hyosung Heavy

Modest diversification

The 3 months correlation between 128660 and Hyosung is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding PJ Metal Co and Hyosung Heavy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyosung Heavy Industries 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 Hyosung Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyosung Heavy Industries has no effect on the direction of PJ Metal i.e., PJ Metal and Hyosung Heavy go up and down completely randomly.

Pair Corralation between PJ Metal and Hyosung Heavy

If you would invest  292,145  in PJ Metal Co on October 25, 2024 and sell it today you would earn a total of  7,855  from holding PJ Metal Co or generate 2.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

PJ Metal Co  vs.  Hyosung Heavy Industries

PJ Metal

Risk-Adjusted Performance

0 of 100

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 somewhat strong basic indicators, PJ Metal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hyosung Heavy Industries

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Hyosung Heavy Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Hyosung Heavy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PJ Metal and Hyosung Heavy

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

The idea behind PJ Metal Co and Hyosung Heavy Industries 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.