Correlation Between Green Cross and CJ Cheiljedang
Can any of the company-specific risk be diversified away by investing in both Green Cross 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 Green Cross and CJ Cheiljedang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Green Cross Medical and CJ Cheiljedang, you can compare the effects of market volatilities on Green Cross 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 Green Cross with a short position of CJ Cheiljedang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Cross and CJ Cheiljedang.
Diversification Opportunities for Green Cross and CJ Cheiljedang
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Green and 097950 is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Green Cross Medical and CJ Cheiljedang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CJ Cheiljedang and Green Cross 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 Green Cross Medical 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 has no effect on the direction of Green Cross i.e., Green Cross and CJ Cheiljedang go up and down completely randomly.
Pair Corralation between Green Cross and CJ Cheiljedang
Assuming the 90 days trading horizon Green Cross Medical is expected to generate 2.1 times more return on investment than CJ Cheiljedang. However, Green Cross is 2.1 times more volatile than CJ Cheiljedang. It trades about -0.01 of its potential returns per unit of risk. CJ Cheiljedang is currently generating about -0.08 per unit of risk. If you would invest 407,000 in Green Cross Medical on September 3, 2024 and sell it today you would lose (57,500) from holding Green Cross Medical or give up 14.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Green Cross Medical vs. CJ Cheiljedang
Performance |
| Timeline |
| Green Cross Medical |
| CJ Cheiljedang |
Green Cross and CJ Cheiljedang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Green Cross and CJ Cheiljedang
The main advantage of trading using opposite Green Cross and CJ Cheiljedang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Cross 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.| Green Cross vs. Samsung Card Co | Green Cross vs. EBEST Investment Securities | Green Cross vs. Koh Young Technology | Green Cross vs. Hansol Chemica |
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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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