Correlation Between Busan Ind and CJ ENM
Can any of the company-specific risk be diversified away by investing in both Busan Ind and CJ ENM 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 Busan Ind and CJ ENM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and CJ ENM, you can compare the effects of market volatilities on Busan Ind and CJ ENM 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 Busan Ind with a short position of CJ ENM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and CJ ENM.
Diversification Opportunities for Busan Ind and CJ ENM
Excellent diversification
The 3 months correlation between Busan and 035760 is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and CJ ENM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CJ ENM and Busan Ind 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 Busan Ind are associated (or correlated) with CJ ENM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CJ ENM has no effect on the direction of Busan Ind i.e., Busan Ind and CJ ENM go up and down completely randomly.
Pair Corralation between Busan Ind and CJ ENM
Assuming the 90 days trading horizon Busan Ind is expected to under-perform the CJ ENM. But the stock apears to be less risky and, when comparing its historical volatility, Busan Ind is 1.14 times less risky than CJ ENM. The stock trades about -0.02 of its potential returns per unit of risk. The CJ ENM is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 7,711,847 in CJ ENM on August 28, 2024 and sell it today you would lose (1,641,847) from holding CJ ENM or give up 21.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Ind vs. CJ ENM
Performance |
| Timeline |
| Busan Ind |
| CJ ENM |
Busan Ind and CJ ENM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and CJ ENM
The main advantage of trading using opposite Busan Ind and CJ ENM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, CJ ENM 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 ENM will offset losses from the drop in CJ ENM's long position.| Busan Ind vs. Jinro Distillers Co | Busan Ind vs. Sam Yang Foods | Busan Ind vs. Daelim Industrial Co | Busan Ind vs. Haesung Industrial Co |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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