Correlation Between Cheryong Industrial and Automobile
Can any of the company-specific risk be diversified away by investing in both Cheryong Industrial and Automobile 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 Cheryong Industrial and Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheryong Industrial CoLtd and Automobile Pc, you can compare the effects of market volatilities on Cheryong Industrial and Automobile 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 Cheryong Industrial with a short position of Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheryong Industrial and Automobile.
Diversification Opportunities for Cheryong Industrial and Automobile
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cheryong and Automobile is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Cheryong Industrial CoLtd and Automobile Pc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automobile Pc and Cheryong Industrial 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 Cheryong Industrial CoLtd are associated (or correlated) with Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automobile Pc has no effect on the direction of Cheryong Industrial i.e., Cheryong Industrial and Automobile go up and down completely randomly.
Pair Corralation between Cheryong Industrial and Automobile
Assuming the 90 days trading horizon Cheryong Industrial CoLtd is expected to generate 1.27 times more return on investment than Automobile. However, Cheryong Industrial is 1.27 times more volatile than Automobile Pc. It trades about 0.05 of its potential returns per unit of risk. Automobile Pc is currently generating about -0.04 per unit of risk. If you would invest 306,477 in Cheryong Industrial CoLtd on September 3, 2024 and sell it today you would earn a total of 207,523 from holding Cheryong Industrial CoLtd or generate 67.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheryong Industrial CoLtd vs. Automobile Pc
Performance |
| Timeline |
| Cheryong Industrial CoLtd |
| Automobile Pc |
Cheryong Industrial and Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheryong Industrial and Automobile
The main advantage of trading using opposite Cheryong Industrial and Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheryong Industrial position performs unexpectedly, Automobile 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 Automobile will offset losses from the drop in Automobile's long position.| Cheryong Industrial vs. SEOJEON ELECTRIC MACHINERY | Cheryong Industrial vs. NH Investment Securities | Cheryong Industrial vs. Keyang Electric Machinery | Cheryong Industrial vs. Atinum Investment Co |
| Automobile vs. Korea Real Estate | Automobile vs. Busan Industrial Co | Automobile vs. UNISEM Co | Automobile vs. RPBio Inc |
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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