Correlation Between CJ Seafood and Daejung Chemicals
Can any of the company-specific risk be diversified away by investing in both CJ Seafood and Daejung Chemicals 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 Daejung Chemicals 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 Daejung Chemicals Metals, you can compare the effects of market volatilities on CJ Seafood and Daejung Chemicals 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 Daejung Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of CJ Seafood and Daejung Chemicals.
Diversification Opportunities for CJ Seafood and Daejung Chemicals
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between 011150 and Daejung is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding CJ Seafood Corp and Daejung Chemicals Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejung Chemicals Metals 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 Daejung Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejung Chemicals Metals has no effect on the direction of CJ Seafood i.e., CJ Seafood and Daejung Chemicals go up and down completely randomly.
Pair Corralation between CJ Seafood and Daejung Chemicals
Assuming the 90 days trading horizon CJ Seafood Corp is expected to under-perform the Daejung Chemicals. But the stock apears to be less risky and, when comparing its historical volatility, CJ Seafood Corp is 1.04 times less risky than Daejung Chemicals. The stock trades about -0.04 of its potential returns per unit of risk. The Daejung Chemicals Metals is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 1,318,000 in Daejung Chemicals Metals on September 12, 2024 and sell it today you would lose (32,000) from holding Daejung Chemicals Metals or give up 2.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CJ Seafood Corp vs. Daejung Chemicals Metals
Performance |
| Timeline |
| CJ Seafood Corp |
| Daejung Chemicals Metals |
CJ Seafood and Daejung Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CJ Seafood and Daejung Chemicals
The main advantage of trading using opposite CJ Seafood and Daejung Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CJ Seafood position performs unexpectedly, Daejung Chemicals 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 Daejung Chemicals will offset losses from the drop in Daejung Chemicals' long position.| CJ Seafood vs. Samsung Electronics Co | CJ Seafood vs. Samsung Electronics Co | CJ Seafood vs. SK Hynix | CJ Seafood vs. POSCO Holdings |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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