Correlation Between CJ Seafood and LG Electronics
Can any of the company-specific risk be diversified away by investing in both CJ Seafood and LG Electronics 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 CJ Seafood and LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CJ Seafood Corp and LG Electronics, you can compare the effects of market volatilities on CJ Seafood and LG Electronics 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 CJ Seafood with a short position of LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of CJ Seafood and LG Electronics.
Diversification Opportunities for CJ Seafood and LG Electronics
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 011150 and 066570 is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding CJ Seafood Corp and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics and CJ Seafood 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 CJ Seafood Corp are associated (or correlated) with LG Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Electronics has no effect on the direction of CJ Seafood i.e., CJ Seafood and LG Electronics go up and down completely randomly.
Pair Corralation between CJ Seafood and LG Electronics
Assuming the 90 days trading horizon CJ Seafood Corp is expected to generate 1.74 times more return on investment than LG Electronics. However, CJ Seafood is 1.74 times more volatile than LG Electronics. It trades about 0.04 of its potential returns per unit of risk. LG Electronics is currently generating about -0.06 per unit of risk. If you would invest 289,500 in CJ Seafood Corp on October 16, 2024 and sell it today you would earn a total of 10,500 from holding CJ Seafood Corp or generate 3.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CJ Seafood Corp vs. LG Electronics
Performance |
| Timeline |
| CJ Seafood Corp |
| LG Electronics |
CJ Seafood and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CJ Seafood and LG Electronics
The main advantage of trading using opposite CJ Seafood and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CJ Seafood position performs unexpectedly, LG Electronics 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 LG Electronics will offset losses from the drop in LG Electronics' long position.| CJ Seafood vs. CKH Food Health | CJ Seafood vs. Choil Aluminum | CJ Seafood vs. Duksan Hi Metal | CJ Seafood vs. BIT Computer Co |
| LG Electronics vs. Shinhan Inverse Silver | LG Electronics vs. Hana Financial | LG Electronics vs. Shinhan Financial Group | LG Electronics vs. Digital Power 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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