Correlation Between Dong A and CJ CheilJedang
Can any of the company-specific risk be diversified away by investing in both Dong A 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 Dong A and CJ CheilJedang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dong A Eltek and CJ CheilJedang Corp, you can compare the effects of market volatilities on Dong A 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 Dong A with a short position of CJ CheilJedang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and CJ CheilJedang.
Diversification Opportunities for Dong A and CJ CheilJedang
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dong and 097955 is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Eltek and CJ CheilJedang Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CJ CheilJedang Corp and Dong A 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 Dong A Eltek 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 Corp has no effect on the direction of Dong A i.e., Dong A and CJ CheilJedang go up and down completely randomly.
Pair Corralation between Dong A and CJ CheilJedang
Assuming the 90 days trading horizon Dong A Eltek is expected to under-perform the CJ CheilJedang. In addition to that, Dong A is 1.88 times more volatile than CJ CheilJedang Corp. It trades about -0.17 of its total potential returns per unit of risk. CJ CheilJedang Corp is currently generating about -0.03 per unit of volatility. If you would invest 13,240,000 in CJ CheilJedang Corp on September 2, 2024 and sell it today you would lose (160,000) from holding CJ CheilJedang Corp or give up 1.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dong A Eltek vs. CJ CheilJedang Corp
Performance |
| Timeline |
| Dong A Eltek |
| CJ CheilJedang Corp |
Dong A and CJ CheilJedang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and CJ CheilJedang
The main advantage of trading using opposite Dong A and CJ CheilJedang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A 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.| Dong A vs. Nable Communications | Dong A vs. Lotte Data Communication | Dong A vs. Sam Yang Foods | Dong A vs. Inzi Display CoLtd |
| CJ CheilJedang vs. Sungmoon Electronics Co | CJ CheilJedang vs. Samji Electronics Co | CJ CheilJedang vs. InnoTherapy | CJ CheilJedang vs. Okins 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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