Correlation Between Neungyule Education and CJ Cheiljedang
Can any of the company-specific risk be diversified away by investing in both Neungyule Education and CJ Cheiljedang 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 Neungyule Education and CJ Cheiljedang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neungyule Education and CJ Cheiljedang, you can compare the effects of market volatilities on Neungyule Education and CJ Cheiljedang 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 Neungyule Education with a short position of CJ Cheiljedang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neungyule Education and CJ Cheiljedang.
Diversification Opportunities for Neungyule Education and CJ Cheiljedang
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Neungyule and 097950 is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Neungyule Education and CJ Cheiljedang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CJ Cheiljedang and Neungyule Education 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 Neungyule Education are associated (or correlated) with CJ Cheiljedang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CJ Cheiljedang has no effect on the direction of Neungyule Education i.e., Neungyule Education and CJ Cheiljedang go up and down completely randomly.
Pair Corralation between Neungyule Education and CJ Cheiljedang
Assuming the 90 days trading horizon Neungyule Education is expected to under-perform the CJ Cheiljedang. In addition to that, Neungyule Education is 1.02 times more volatile than CJ Cheiljedang. It trades about -0.07 of its total potential returns per unit of risk. CJ Cheiljedang is currently generating about -0.06 per unit of volatility. If you would invest 27,450,000 in CJ Cheiljedang on September 1, 2024 and sell it today you would lose (1,100,000) from holding CJ Cheiljedang or give up 4.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Neungyule Education vs. CJ Cheiljedang
Performance |
| Timeline |
| Neungyule Education |
| CJ Cheiljedang |
Neungyule Education and CJ Cheiljedang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neungyule Education and CJ Cheiljedang
The main advantage of trading using opposite Neungyule Education and CJ Cheiljedang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neungyule Education position performs unexpectedly, CJ Cheiljedang 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 Cheiljedang will offset losses from the drop in CJ Cheiljedang's long position.| Neungyule Education vs. LG Display | Neungyule Education vs. Hyundai Motor | Neungyule Education vs. Hyundai Motor Co | Neungyule Education vs. Hyundai Motor Co |
| CJ Cheiljedang vs. Hyundai Engineering Plastics | CJ Cheiljedang vs. Iljin Materials Co | CJ Cheiljedang vs. LS Materials | CJ Cheiljedang vs. Neungyule Education |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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