Correlation Between Nam Hwa and CJ Seafood
Can any of the company-specific risk be diversified away by investing in both Nam Hwa 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 Nam Hwa and CJ Seafood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nam Hwa Construction and CJ Seafood Corp, you can compare the effects of market volatilities on Nam Hwa 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 Nam Hwa with a short position of CJ Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nam Hwa and CJ Seafood.
Diversification Opportunities for Nam Hwa and CJ Seafood
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nam and 011150 is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Nam Hwa Construction 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 Nam Hwa 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 Nam Hwa 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 Nam Hwa i.e., Nam Hwa and CJ Seafood go up and down completely randomly.
Pair Corralation between Nam Hwa and CJ Seafood
Assuming the 90 days trading horizon Nam Hwa Construction is expected to under-perform the CJ Seafood. But the stock apears to be less risky and, when comparing its historical volatility, Nam Hwa Construction is 1.99 times less risky than CJ Seafood. The stock trades about -0.1 of its potential returns per unit of risk. The CJ Seafood Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 291,500 in CJ Seafood Corp on October 12, 2024 and sell it today you would earn a total of 11,500 from holding CJ Seafood Corp or generate 3.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nam Hwa Construction vs. CJ Seafood Corp
Performance |
| Timeline |
| Nam Hwa Construction |
| CJ Seafood Corp |
Nam Hwa and CJ Seafood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nam Hwa and CJ Seafood
The main advantage of trading using opposite Nam Hwa and CJ Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nam Hwa 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.| Nam Hwa vs. PI Advanced Materials | Nam Hwa vs. Solus Advanced Materials | Nam Hwa vs. Daejoo Electronic Materials | Nam Hwa vs. PJ Metal Co |
| CJ Seafood vs. Daou Technology | CJ Seafood vs. Nam Hwa Construction | CJ Seafood vs. Keyang Electric Machinery | CJ Seafood vs. Semyung Electric Machinery |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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