Correlation Between CJ ENM and SBI Investment
Can any of the company-specific risk be diversified away by investing in both CJ ENM and SBI Investment 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 CJ ENM and SBI Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CJ ENM and SBI Investment KOREA, you can compare the effects of market volatilities on CJ ENM and SBI Investment 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 CJ ENM with a short position of SBI Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of CJ ENM and SBI Investment.
Diversification Opportunities for CJ ENM and SBI Investment
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 035760 and SBI is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding CJ ENM and SBI Investment KOREA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Investment KOREA and CJ ENM 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 CJ ENM are associated (or correlated) with SBI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Investment KOREA has no effect on the direction of CJ ENM i.e., CJ ENM and SBI Investment go up and down completely randomly.
Pair Corralation between CJ ENM and SBI Investment
Assuming the 90 days trading horizon CJ ENM is expected to generate 1.17 times more return on investment than SBI Investment. However, CJ ENM is 1.17 times more volatile than SBI Investment KOREA. It trades about -0.02 of its potential returns per unit of risk. SBI Investment KOREA is currently generating about -0.03 per unit of risk. If you would invest 9,661,856 in CJ ENM on September 4, 2024 and sell it today you would lose (3,281,856) from holding CJ ENM or give up 33.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CJ ENM vs. SBI Investment KOREA
Performance |
| Timeline |
| CJ ENM |
| SBI Investment KOREA |
CJ ENM and SBI Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CJ ENM and SBI Investment
The main advantage of trading using opposite CJ ENM and SBI Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CJ ENM position performs unexpectedly, SBI Investment 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 SBI Investment will offset losses from the drop in SBI Investment's long position.The idea behind CJ ENM and SBI Investment KOREA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| SBI Investment vs. Foodnamoo | SBI Investment vs. CJ Seafood Corp | SBI Investment vs. Hyundai Green Food | SBI Investment vs. Playgram 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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