Correlation Between CJ ENM and KB Financial
Can any of the company-specific risk be diversified away by investing in both CJ ENM and KB Financial 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 KB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CJ ENM and KB Financial Group, you can compare the effects of market volatilities on CJ ENM and KB Financial 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 KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CJ ENM and KB Financial.
Diversification Opportunities for CJ ENM and KB Financial
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 035760 and 105560 is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding CJ ENM and KB Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB Financial Group 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 KB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB Financial Group has no effect on the direction of CJ ENM i.e., CJ ENM and KB Financial go up and down completely randomly.
Pair Corralation between CJ ENM and KB Financial
Assuming the 90 days trading horizon CJ ENM is expected to generate 0.9 times more return on investment than KB Financial. However, CJ ENM is 1.12 times less risky than KB Financial. It trades about 0.13 of its potential returns per unit of risk. KB Financial Group is currently generating about -0.14 per unit of risk. If you would invest 5,450,000 in CJ ENM on September 12, 2024 and sell it today you would earn a total of 420,000 from holding CJ ENM or generate 7.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CJ ENM vs. KB Financial Group
Performance |
| Timeline |
| CJ ENM |
| KB Financial Group |
CJ ENM and KB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CJ ENM and KB Financial
The main advantage of trading using opposite CJ ENM and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CJ ENM position performs unexpectedly, KB Financial 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 KB Financial will offset losses from the drop in KB Financial's long position.The idea behind CJ ENM and KB Financial Group 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.| KB Financial vs. Shinhan Financial Group | KB Financial vs. Hana Financial | KB Financial vs. Woori Financial Group | KB Financial vs. Samsung 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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Commodity Directory Find actively traded commodities issued by global exchanges |