Correlation Between Cheryong Industrial and CJ CheilJedang
Can any of the company-specific risk be diversified away by investing in both Cheryong Industrial 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 Cheryong Industrial and CJ CheilJedang 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 CJ CheilJedang Corp, you can compare the effects of market volatilities on Cheryong Industrial 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 Cheryong Industrial with a short position of CJ CheilJedang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheryong Industrial and CJ CheilJedang.
Diversification Opportunities for Cheryong Industrial and CJ CheilJedang
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cheryong and 097955 is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cheryong Industrial CoLtd and CJ CheilJedang Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CJ CheilJedang Corp 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 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 Corp has no effect on the direction of Cheryong Industrial i.e., Cheryong Industrial and CJ CheilJedang go up and down completely randomly.
Pair Corralation between Cheryong Industrial and CJ CheilJedang
Assuming the 90 days trading horizon Cheryong Industrial CoLtd is expected to generate 3.74 times more return on investment than CJ CheilJedang. However, Cheryong Industrial is 3.74 times more volatile than CJ CheilJedang Corp. It trades about 0.03 of its potential returns per unit of risk. CJ CheilJedang Corp is currently generating about -0.01 per unit of risk. If you would invest 466,310 in Cheryong Industrial CoLtd on August 31, 2024 and sell it today you would earn a total of 47,690 from holding Cheryong Industrial CoLtd or generate 10.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheryong Industrial CoLtd vs. CJ CheilJedang Corp
Performance |
| Timeline |
| Cheryong Industrial CoLtd |
| CJ CheilJedang Corp |
Cheryong Industrial and CJ CheilJedang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheryong Industrial and CJ CheilJedang
The main advantage of trading using opposite Cheryong Industrial and CJ CheilJedang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheryong Industrial 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.| Cheryong Industrial vs. Nature and Environment | Cheryong Industrial vs. Busan Industrial Co | Cheryong Industrial vs. Busan Ind | Cheryong Industrial vs. Mirae Asset Daewoo |
| CJ CheilJedang vs. TS Investment Corp | CJ CheilJedang vs. Hanjoo Light Metal | CJ CheilJedang vs. Samyang Foods Co | CJ CheilJedang vs. DB Financial Investment |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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