Correlation Between GaeaSoft Corp and CJ ENM
Can any of the company-specific risk be diversified away by investing in both GaeaSoft Corp and CJ ENM 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 GaeaSoft Corp and CJ ENM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GaeaSoft Corp and CJ ENM, you can compare the effects of market volatilities on GaeaSoft Corp and CJ ENM 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 GaeaSoft Corp with a short position of CJ ENM. Check out your portfolio center. Please also check ongoing floating volatility patterns of GaeaSoft Corp and CJ ENM.
Diversification Opportunities for GaeaSoft Corp and CJ ENM
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GaeaSoft and 035760 is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding GaeaSoft Corp and CJ ENM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CJ ENM and GaeaSoft Corp 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 GaeaSoft Corp are associated (or correlated) with CJ ENM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CJ ENM has no effect on the direction of GaeaSoft Corp i.e., GaeaSoft Corp and CJ ENM go up and down completely randomly.
Pair Corralation between GaeaSoft Corp and CJ ENM
Assuming the 90 days trading horizon GaeaSoft Corp is expected to under-perform the CJ ENM. But the stock apears to be less risky and, when comparing its historical volatility, GaeaSoft Corp is 1.84 times less risky than CJ ENM. The stock trades about -0.14 of its potential returns per unit of risk. The CJ ENM is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 6,200,000 in CJ ENM on August 28, 2024 and sell it today you would lose (130,000) from holding CJ ENM or give up 2.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GaeaSoft Corp vs. CJ ENM
Performance |
| Timeline |
| GaeaSoft Corp |
| CJ ENM |
GaeaSoft Corp and CJ ENM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GaeaSoft Corp and CJ ENM
The main advantage of trading using opposite GaeaSoft Corp and CJ ENM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GaeaSoft Corp position performs unexpectedly, CJ ENM 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 ENM will offset losses from the drop in CJ ENM's long position.| GaeaSoft Corp vs. Korea Real Estate | GaeaSoft Corp vs. Korea Ratings Co | GaeaSoft Corp vs. IQuest Co | GaeaSoft Corp vs. Wonbang Tech 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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