Correlation Between CJ Cheiljedang and Hyosung Heavy
Can any of the company-specific risk be diversified away by investing in both CJ Cheiljedang and Hyosung Heavy 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 Hyosung Heavy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CJ Cheiljedang and Hyosung Heavy Industries, you can compare the effects of market volatilities on CJ Cheiljedang and Hyosung Heavy 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 Hyosung Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of CJ Cheiljedang and Hyosung Heavy.
Diversification Opportunities for CJ Cheiljedang and Hyosung Heavy
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 097950 and Hyosung is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding CJ Cheiljedang and Hyosung Heavy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyosung Heavy Industries 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 Hyosung Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyosung Heavy Industries has no effect on the direction of CJ Cheiljedang i.e., CJ Cheiljedang and Hyosung Heavy go up and down completely randomly.
Pair Corralation between CJ Cheiljedang and Hyosung Heavy
Assuming the 90 days trading horizon CJ Cheiljedang is expected to under-perform the Hyosung Heavy. But the stock apears to be less risky and, when comparing its historical volatility, CJ Cheiljedang is 2.33 times less risky than Hyosung Heavy. The stock trades about -0.28 of its potential returns per unit of risk. The Hyosung Heavy Industries is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 40,950,000 in Hyosung Heavy Industries on October 21, 2024 and sell it today you would earn a total of 7,050,000 from holding Hyosung Heavy Industries or generate 17.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CJ Cheiljedang vs. Hyosung Heavy Industries
Performance |
| Timeline |
| CJ Cheiljedang |
| Hyosung Heavy Industries |
CJ Cheiljedang and Hyosung Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CJ Cheiljedang and Hyosung Heavy
The main advantage of trading using opposite CJ Cheiljedang and Hyosung Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CJ Cheiljedang position performs unexpectedly, Hyosung Heavy 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 Hyosung Heavy will offset losses from the drop in Hyosung Heavy's long position.| CJ Cheiljedang vs. Korean Reinsurance Co | CJ Cheiljedang vs. Seoul Semiconductor Co | CJ Cheiljedang vs. DB Insurance Co | CJ Cheiljedang vs. Dongbu Insurance Co |
| Hyosung Heavy vs. INNOX Advanced Materials | Hyosung Heavy vs. System and Application | Hyosung Heavy vs. Top Material Co | Hyosung Heavy vs. SCI Information Service |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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