Correlation Between Digital Power and CJ Seafood
Can any of the company-specific risk be diversified away by investing in both Digital Power 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 Digital Power and CJ Seafood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digital Power Communications and CJ Seafood Corp, you can compare the effects of market volatilities on Digital Power 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 Digital Power with a short position of CJ Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Power and CJ Seafood.
Diversification Opportunities for Digital Power and CJ Seafood
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Digital and 011155 is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Digital Power Communications 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 Digital Power 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 Digital Power Communications 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 Digital Power i.e., Digital Power and CJ Seafood go up and down completely randomly.
Pair Corralation between Digital Power and CJ Seafood
Assuming the 90 days trading horizon Digital Power is expected to generate 1.69 times less return on investment than CJ Seafood. But when comparing it to its historical volatility, Digital Power Communications is 2.78 times less risky than CJ Seafood. It trades about 0.01 of its potential returns per unit of risk. CJ Seafood Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,881,000 in CJ Seafood Corp on November 27, 2024 and sell it today you would lose (209,000) from holding CJ Seafood Corp or give up 11.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Power Communications vs. CJ Seafood Corp
Performance |
| Timeline |
| Digital Power Commun |
| CJ Seafood Corp |
Digital Power and CJ Seafood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Power and CJ Seafood
The main advantage of trading using opposite Digital Power and CJ Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Power 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.| Digital Power vs. AptaBio Therapeutics | Digital Power vs. Daewoo SBI SPAC | Digital Power vs. Dream Security co | Digital Power vs. Microfriend |
| CJ Seafood vs. Lotte Non Life Insurance | CJ Seafood vs. UJU Electronics Co | CJ Seafood vs. Samwha Electronics Co | CJ Seafood vs. Shinil Electronics 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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