Correlation Between CJ Cheiljedang and Hyundai Industrial
Can any of the company-specific risk be diversified away by investing in both CJ Cheiljedang and Hyundai Industrial 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 Industrial 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 Industrial Co, you can compare the effects of market volatilities on CJ Cheiljedang and Hyundai Industrial 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 Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CJ Cheiljedang and Hyundai Industrial.
Diversification Opportunities for CJ Cheiljedang and Hyundai Industrial
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between 097950 and Hyundai is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding CJ Cheiljedang and Hyundai Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Industrial 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 Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Industrial has no effect on the direction of CJ Cheiljedang i.e., CJ Cheiljedang and Hyundai Industrial go up and down completely randomly.
Pair Corralation between CJ Cheiljedang and Hyundai Industrial
Assuming the 90 days trading horizon CJ Cheiljedang is expected to generate 1.8 times more return on investment than Hyundai Industrial. However, CJ Cheiljedang is 1.8 times more volatile than Hyundai Industrial Co. It trades about -0.09 of its potential returns per unit of risk. Hyundai Industrial Co is currently generating about -0.19 per unit of risk. If you would invest 27,850,000 in CJ Cheiljedang on September 4, 2024 and sell it today you would lose (1,500,000) from holding CJ Cheiljedang or give up 5.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
CJ Cheiljedang vs. Hyundai Industrial Co
Performance |
| Timeline |
| CJ Cheiljedang |
| Hyundai Industrial |
CJ Cheiljedang and Hyundai Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CJ Cheiljedang and Hyundai Industrial
The main advantage of trading using opposite CJ Cheiljedang and Hyundai Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CJ Cheiljedang position performs unexpectedly, Hyundai Industrial 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 Industrial will offset losses from the drop in Hyundai Industrial's long position.| CJ Cheiljedang vs. Hyundai Industrial Co | CJ Cheiljedang vs. PJ Metal Co | CJ Cheiljedang vs. Kbi Metal Co | CJ Cheiljedang vs. Haitai Confectionery Foods |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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