Correlation Between CJ ENM and Dgb Financial
Can any of the company-specific risk be diversified away by investing in both CJ ENM and Dgb 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 Dgb 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 Dgb Financial, you can compare the effects of market volatilities on CJ ENM and Dgb 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 Dgb Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CJ ENM and Dgb Financial.
Diversification Opportunities for CJ ENM and Dgb Financial
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 035760 and Dgb is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding CJ ENM and Dgb Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dgb Financial 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 Dgb Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dgb Financial has no effect on the direction of CJ ENM i.e., CJ ENM and Dgb Financial go up and down completely randomly.
Pair Corralation between CJ ENM and Dgb Financial
Assuming the 90 days trading horizon CJ ENM is expected to under-perform the Dgb Financial. In addition to that, CJ ENM is 1.89 times more volatile than Dgb Financial. It trades about -0.01 of its total potential returns per unit of risk. Dgb Financial is currently generating about 0.05 per unit of volatility. If you would invest 789,946 in Dgb Financial on September 4, 2024 and sell it today you would earn a total of 143,054 from holding Dgb Financial or generate 18.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CJ ENM vs. Dgb Financial
Performance |
| Timeline |
| CJ ENM |
| Dgb Financial |
CJ ENM and Dgb Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CJ ENM and Dgb Financial
The main advantage of trading using opposite CJ ENM and Dgb Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CJ ENM position performs unexpectedly, Dgb 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 Dgb Financial will offset losses from the drop in Dgb Financial's long position.The idea behind CJ ENM and Dgb Financial 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.| Dgb Financial vs. Dongjin Semichem Co | Dgb Financial vs. AhnLab Inc | Dgb Financial vs. Posco ICT | Dgb Financial 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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