Correlation Between Posco ICT and CJ ENM
Can any of the company-specific risk be diversified away by investing in both Posco ICT 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 Posco ICT and CJ ENM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Posco ICT and CJ ENM, you can compare the effects of market volatilities on Posco ICT 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 Posco ICT with a short position of CJ ENM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Posco ICT and CJ ENM.
Diversification Opportunities for Posco ICT and CJ ENM
Very weak diversification
The 3 months correlation between Posco and 035760 is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Posco ICT and CJ ENM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CJ ENM and Posco ICT 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 Posco ICT 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 Posco ICT i.e., Posco ICT and CJ ENM go up and down completely randomly.
Pair Corralation between Posco ICT and CJ ENM
Assuming the 90 days trading horizon Posco ICT is expected to under-perform the CJ ENM. In addition to that, Posco ICT is 1.05 times more volatile than CJ ENM. It trades about -0.26 of its total potential returns per unit of risk. CJ ENM is currently generating about -0.03 per unit of volatility. If you would invest 6,240,000 in CJ ENM on August 24, 2024 and sell it today you would lose (190,000) from holding CJ ENM or give up 3.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Posco ICT vs. CJ ENM
Performance |
| Timeline |
| Posco ICT |
| CJ ENM |
Posco ICT and CJ ENM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Posco ICT and CJ ENM
The main advantage of trading using opposite Posco ICT and CJ ENM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Posco ICT 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.| Posco ICT vs. SFA Engineering | Posco ICT vs. CJ ENM | Posco ICT vs. Paradise Co | Posco ICT vs. Seoul Semiconductor 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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