Correlation Between Namyang Dairy and CJ Cheiljedang
Can any of the company-specific risk be diversified away by investing in both Namyang Dairy and CJ Cheiljedang 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 Namyang Dairy and CJ Cheiljedang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Namyang Dairy and CJ Cheiljedang, you can compare the effects of market volatilities on Namyang Dairy and CJ Cheiljedang 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 Namyang Dairy with a short position of CJ Cheiljedang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namyang Dairy and CJ Cheiljedang.
Diversification Opportunities for Namyang Dairy and CJ Cheiljedang
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Namyang and 097950 is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Namyang Dairy and CJ Cheiljedang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CJ Cheiljedang and Namyang Dairy 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 Namyang Dairy are associated (or correlated) with CJ Cheiljedang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CJ Cheiljedang has no effect on the direction of Namyang Dairy i.e., Namyang Dairy and CJ Cheiljedang go up and down completely randomly.
Pair Corralation between Namyang Dairy and CJ Cheiljedang
Assuming the 90 days trading horizon Namyang Dairy is expected to generate 52.6 times more return on investment than CJ Cheiljedang. However, Namyang Dairy is 52.6 times more volatile than CJ Cheiljedang. It trades about 0.12 of its potential returns per unit of risk. CJ Cheiljedang is currently generating about -0.09 per unit of risk. If you would invest 4,930,000 in Namyang Dairy on September 2, 2024 and sell it today you would earn a total of 1,880,000 from holding Namyang Dairy or generate 38.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.18% |
| Values | Daily Returns |
Namyang Dairy vs. CJ Cheiljedang
Performance |
| Timeline |
| Namyang Dairy |
| CJ Cheiljedang |
Namyang Dairy and CJ Cheiljedang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namyang Dairy and CJ Cheiljedang
The main advantage of trading using opposite Namyang Dairy and CJ Cheiljedang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namyang Dairy position performs unexpectedly, CJ Cheiljedang 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 CJ Cheiljedang will offset losses from the drop in CJ Cheiljedang's long position.| Namyang Dairy vs. Korea Real Estate | Namyang Dairy vs. Korea Ratings Co | Namyang Dairy vs. IQuest Co | Namyang Dairy vs. Wonbang Tech Co |
| CJ Cheiljedang vs. Green Cross Medical | CJ Cheiljedang vs. Handok Clean Tech | CJ Cheiljedang vs. Polaris Office Corp | CJ Cheiljedang vs. Daishin Information Communications |
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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