Correlation Between Signature Resources and PJX Resources

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

By analyzing existing cross correlation between Signature Resources and PJX Resources, you can compare the effects of market volatilities on Signature Resources and PJX Resources 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 Signature Resources with a short position of PJX Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Signature Resources and PJX Resources.

Diversification Opportunities for Signature Resources and PJX Resources

-0.31

Correlation Coefficient

Signature Resources  PJX Resources

Very good diversification

The 3 months correlation between Signature and PJX is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Signature Resources and PJX Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJX Resources and Signature Resources 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 Signature Resources are associated (or correlated) with PJX Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJX Resources has no effect on the direction of Signature Resources i.e., Signature Resources and PJX Resources go up and down completely randomly.

Pair Corralation between Signature Resources and PJX Resources

Assuming the 90 days horizon Signature Resources is expected to generate 1.81 times more return on investment than PJX Resources. However, Signature Resources is 1.81 times more volatile than PJX Resources. It trades about 0.12 of its potential returns per unit of risk. PJX Resources is currently generating about 0.09 per unit of risk. If you would invest  3.00  in Signature Resources on December 20, 2024 and sell it today you would earn a total of  2.50  from holding Signature Resources or generate 83.33% return on investment over 90 days.

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

Signature Resources  vs.  PJX Resources

Signature Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Signature Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Signature Resources showed solid returns over the last few months and may actually be approaching a breakup point.

PJX Resources

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PJX Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, PJX Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Signature Resources and PJX Resources

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

The idea behind Signature Resources and PJX Resources 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.