Correlation Between Incar Financial and PJ Metal

Can any of the company-specific risk be diversified away by investing in both Incar Financial and PJ Metal 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 Incar Financial and PJ Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Incar Financial Service and PJ Metal Co, you can compare the effects of market volatilities on Incar Financial and PJ Metal 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 Incar Financial with a short position of PJ Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Incar Financial and PJ Metal.

Diversification Opportunities for Incar Financial and PJ Metal

-0.4

Correlation Coefficient

Incar Financial  PJ Metal

Very good diversification

The 3 months correlation between Incar and 128660 is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Incar Financial Service and PJ Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJ Metal and Incar Financial 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 Incar Financial Service are associated (or correlated) with PJ Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJ Metal has no effect on the direction of Incar Financial i.e., Incar Financial and PJ Metal go up and down completely randomly.

Pair Corralation between Incar Financial and PJ Metal

Assuming the 90 days trading horizon Incar Financial Service is expected to generate 1.47 times more return on investment than PJ Metal. However, Incar Financial is 1.47 times more volatile than PJ Metal Co. It trades about 0.07 of its potential returns per unit of risk. PJ Metal Co is currently generating about -0.09 per unit of risk. If you would invest  515,000  in Incar Financial Service on September 21, 2024 and sell it today you would earn a total of  47,000  from holding Incar Financial Service or generate 9.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Incar Financial Service  vs.  PJ Metal Co

Incar Financial Service

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Incar Financial Service are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Incar Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

PJ Metal

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PJ Metal Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Incar Financial and PJ Metal

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

The idea behind Incar Financial Service and PJ Metal 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.