Correlation Between Busan Industrial and CJ Seafood
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and CJ Seafood 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 Industrial and CJ Seafood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Industrial Co and CJ Seafood Corp, you can compare the effects of market volatilities on Busan Industrial and CJ Seafood 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 Industrial with a short position of CJ Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and CJ Seafood.
Diversification Opportunities for Busan Industrial and CJ Seafood
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Busan and 011150 is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and CJ Seafood Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CJ Seafood Corp and Busan Industrial 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 Industrial Co are associated (or correlated) with CJ Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CJ Seafood Corp has no effect on the direction of Busan Industrial i.e., Busan Industrial and CJ Seafood go up and down completely randomly.
Pair Corralation between Busan Industrial and CJ Seafood
Assuming the 90 days trading horizon Busan Industrial Co is expected to generate 2.54 times more return on investment than CJ Seafood. However, Busan Industrial is 2.54 times more volatile than CJ Seafood Corp. It trades about 0.14 of its potential returns per unit of risk. CJ Seafood Corp is currently generating about -0.05 per unit of risk. If you would invest 5,130,000 in Busan Industrial Co on September 26, 2024 and sell it today you would earn a total of 2,590,000 from holding Busan Industrial Co or generate 50.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Industrial Co vs. CJ Seafood Corp
Performance |
| Timeline |
| Busan Industrial |
| CJ Seafood Corp |
Busan Industrial and CJ Seafood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and CJ Seafood
The main advantage of trading using opposite Busan Industrial and CJ Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, CJ Seafood 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 Seafood will offset losses from the drop in CJ Seafood's long position.| Busan Industrial vs. AptaBio Therapeutics | Busan Industrial vs. Wonbang Tech Co | Busan Industrial vs. Busan Ind | Busan Industrial vs. Mirae Asset Daewoo |
| CJ Seafood vs. AptaBio Therapeutics | CJ Seafood vs. Wonbang Tech Co | CJ Seafood vs. Busan Industrial Co | CJ Seafood vs. Busan Ind |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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