Correlation Between Dongnam Chemical and CJ Seafood
Can any of the company-specific risk be diversified away by investing in both Dongnam Chemical 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 Dongnam Chemical and CJ Seafood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongnam Chemical Co and CJ Seafood Corp, you can compare the effects of market volatilities on Dongnam Chemical 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 Dongnam Chemical with a short position of CJ Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongnam Chemical and CJ Seafood.
Diversification Opportunities for Dongnam Chemical and CJ Seafood
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dongnam and 011150 is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Dongnam Chemical 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 Dongnam Chemical 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 Dongnam Chemical 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 Dongnam Chemical i.e., Dongnam Chemical and CJ Seafood go up and down completely randomly.
Pair Corralation between Dongnam Chemical and CJ Seafood
Assuming the 90 days trading horizon Dongnam Chemical Co is expected to under-perform the CJ Seafood. But the stock apears to be less risky and, when comparing its historical volatility, Dongnam Chemical Co is 2.57 times less risky than CJ Seafood. The stock trades about -0.05 of its potential returns per unit of risk. The CJ Seafood Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 330,500 in CJ Seafood Corp on October 28, 2024 and sell it today you would lose (33,000) from holding CJ Seafood Corp or give up 9.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongnam Chemical Co vs. CJ Seafood Corp
Performance |
| Timeline |
| Dongnam Chemical |
| CJ Seafood Corp |
Dongnam Chemical and CJ Seafood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongnam Chemical and CJ Seafood
The main advantage of trading using opposite Dongnam Chemical and CJ Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongnam Chemical 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.| Dongnam Chemical vs. Sangsin Energy Display | Dongnam Chemical vs. Iljin Display | Dongnam Chemical vs. Kolon Plastics | Dongnam Chemical vs. Daishin Information Communications |
| CJ Seafood vs. Sangsin Energy Display | CJ Seafood vs. Inzi Display CoLtd | CJ Seafood vs. Jeju Air Co | CJ Seafood vs. PLAYWITH |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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