Correlation Between CJ ENM and SCI Information
Can any of the company-specific risk be diversified away by investing in both CJ ENM and SCI Information 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 SCI Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CJ ENM and SCI Information Service, you can compare the effects of market volatilities on CJ ENM and SCI Information 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 SCI Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of CJ ENM and SCI Information.
Diversification Opportunities for CJ ENM and SCI Information
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 035760 and SCI is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding CJ ENM and SCI Information Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCI Information Service 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 SCI Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCI Information Service has no effect on the direction of CJ ENM i.e., CJ ENM and SCI Information go up and down completely randomly.
Pair Corralation between CJ ENM and SCI Information
Assuming the 90 days trading horizon CJ ENM is expected to generate 1.18 times more return on investment than SCI Information. However, CJ ENM is 1.18 times more volatile than SCI Information Service. It trades about -0.05 of its potential returns per unit of risk. SCI Information Service is currently generating about -0.24 per unit of risk. If you would invest 7,100,000 in CJ ENM on September 4, 2024 and sell it today you would lose (720,000) from holding CJ ENM or give up 10.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CJ ENM vs. SCI Information Service
Performance |
| Timeline |
| CJ ENM |
| SCI Information Service |
CJ ENM and SCI Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CJ ENM and SCI Information
The main advantage of trading using opposite CJ ENM and SCI Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CJ ENM position performs unexpectedly, SCI Information 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 SCI Information will offset losses from the drop in SCI Information's long position.The idea behind CJ ENM and SCI Information Service 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.| SCI Information vs. Dongjin Semichem Co | SCI Information vs. AhnLab Inc | SCI Information vs. Posco ICT | SCI Information vs. CJ ENM |
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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