Correlation Between CJ Cheiljedang and Hyundai Engineering
Can any of the company-specific risk be diversified away by investing in both CJ Cheiljedang and Hyundai Engineering 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 CJ Cheiljedang and Hyundai Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CJ Cheiljedang and Hyundai Engineering Construction, you can compare the effects of market volatilities on CJ Cheiljedang and Hyundai Engineering 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 CJ Cheiljedang with a short position of Hyundai Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of CJ Cheiljedang and Hyundai Engineering.
Diversification Opportunities for CJ Cheiljedang and Hyundai Engineering
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 097950 and Hyundai is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding CJ Cheiljedang and Hyundai Engineering Constructi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Engineering and CJ Cheiljedang 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 CJ Cheiljedang are associated (or correlated) with Hyundai Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Engineering has no effect on the direction of CJ Cheiljedang i.e., CJ Cheiljedang and Hyundai Engineering go up and down completely randomly.
Pair Corralation between CJ Cheiljedang and Hyundai Engineering
Assuming the 90 days trading horizon CJ Cheiljedang is expected to generate 3.97 times less return on investment than Hyundai Engineering. But when comparing it to its historical volatility, CJ Cheiljedang is 1.34 times less risky than Hyundai Engineering. It trades about 0.1 of its potential returns per unit of risk. Hyundai Engineering Construction is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 3,105,000 in Hyundai Engineering Construction on November 27, 2024 and sell it today you would earn a total of 425,000 from holding Hyundai Engineering Construction or generate 13.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CJ Cheiljedang vs. Hyundai Engineering Constructi
Performance |
| Timeline |
| CJ Cheiljedang |
| Hyundai Engineering |
CJ Cheiljedang and Hyundai Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CJ Cheiljedang and Hyundai Engineering
The main advantage of trading using opposite CJ Cheiljedang and Hyundai Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CJ Cheiljedang position performs unexpectedly, Hyundai Engineering 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 Hyundai Engineering will offset losses from the drop in Hyundai Engineering's long position.| CJ Cheiljedang vs. Daejoo Electronic Materials | CJ Cheiljedang vs. Daishin Information Communications | CJ Cheiljedang vs. Nice Information Telecommunication | CJ Cheiljedang vs. Mobileleader CoLtd |
| Hyundai Engineering vs. Ilji Technology Co | Hyundai Engineering vs. Aprogen Healthcare Games | Hyundai Engineering vs. LG Household Healthcare | Hyundai Engineering vs. NewFlex Technology 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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