Correlation Between Daewoo Engineering and CJ Seafood
Can any of the company-specific risk be diversified away by investing in both Daewoo Engineering 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 Daewoo Engineering and CJ Seafood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewoo Engineering Construction and CJ Seafood Corp, you can compare the effects of market volatilities on Daewoo Engineering 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 Daewoo Engineering with a short position of CJ Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo Engineering and CJ Seafood.
Diversification Opportunities for Daewoo Engineering and CJ Seafood
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daewoo and 011155 is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo Engineering Constructio 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 Daewoo Engineering 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 Daewoo Engineering Construction 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 Daewoo Engineering i.e., Daewoo Engineering and CJ Seafood go up and down completely randomly.
Pair Corralation between Daewoo Engineering and CJ Seafood
Assuming the 90 days trading horizon Daewoo Engineering Construction is expected to under-perform the CJ Seafood. But the stock apears to be less risky and, when comparing its historical volatility, Daewoo Engineering Construction is 2.17 times less risky than CJ Seafood. The stock trades about -0.01 of its potential returns per unit of risk. The CJ Seafood Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 2,465,000 in CJ Seafood Corp on November 27, 2024 and sell it today you would lose (793,000) from holding CJ Seafood Corp or give up 32.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo Engineering Constructio vs. CJ Seafood Corp
Performance |
| Timeline |
| Daewoo Engineering |
| CJ Seafood Corp |
Daewoo Engineering and CJ Seafood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo Engineering and CJ Seafood
The main advantage of trading using opposite Daewoo Engineering and CJ Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo Engineering 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.| Daewoo Engineering vs. Bookook Steel | Daewoo Engineering vs. Hyundai BNG Steel | Daewoo Engineering vs. GAMEVIL | Daewoo Engineering vs. Netmarble Games Corp |
| 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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