Correlation Between PJ Metal and THiRA UTECH

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

Diversification Opportunities for PJ Metal and THiRA UTECH

0.52

Correlation Coefficient

PJ Metal  THiRA UTECH

Very weak diversification

The 3 months correlation between 128660 and THiRA is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding PJ Metal Co and THiRA UTECH LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THiRA UTECH LTD 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 THiRA UTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THiRA UTECH LTD has no effect on the direction of PJ Metal i.e., PJ Metal and THiRA UTECH go up and down completely randomly.

Pair Corralation between PJ Metal and THiRA UTECH

Assuming the 90 days trading horizon PJ Metal is expected to generate 13.79 times less return on investment than THiRA UTECH. But when comparing it to its historical volatility, PJ Metal Co is 1.22 times less risky than THiRA UTECH. It trades about 0.0 of its potential returns per unit of risk. THiRA UTECH LTD is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  481,500  in THiRA UTECH LTD on October 5, 2024 and sell it today you would earn a total of  33,500  from holding THiRA UTECH LTD or generate 6.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.61%
Values	Daily Returns

PJ Metal Co  vs.  THiRA UTECH LTD

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

THiRA UTECH LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days THiRA UTECH LTD 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.

Pair Trading with PJ Metal and THiRA UTECH

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

The idea behind PJ Metal Co and THiRA UTECH LTD 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.