Correlation Between NOVATECH and CJ ENM
Can any of the company-specific risk be diversified away by investing in both NOVATECH and CJ ENM 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 NOVATECH and CJ ENM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NOVATECH Co and CJ ENM, you can compare the effects of market volatilities on NOVATECH and CJ ENM 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 NOVATECH with a short position of CJ ENM. Check out your portfolio center. Please also check ongoing floating volatility patterns of NOVATECH and CJ ENM.
Diversification Opportunities for NOVATECH and CJ ENM
Excellent diversification
The 3 months correlation between NOVATECH and 035760 is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding NOVATECH Co and CJ ENM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CJ ENM and NOVATECH 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 NOVATECH Co are associated (or correlated) with CJ ENM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CJ ENM has no effect on the direction of NOVATECH i.e., NOVATECH and CJ ENM go up and down completely randomly.
Pair Corralation between NOVATECH and CJ ENM
Assuming the 90 days trading horizon NOVATECH Co is expected to generate 1.31 times more return on investment than CJ ENM. However, NOVATECH is 1.31 times more volatile than CJ ENM. It trades about 0.19 of its potential returns per unit of risk. CJ ENM is currently generating about -0.19 per unit of risk. If you would invest 1,589,000 in NOVATECH Co on October 21, 2024 and sell it today you would earn a total of 161,000 from holding NOVATECH Co or generate 10.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NOVATECH Co vs. CJ ENM
Performance |
| Timeline |
| NOVATECH |
| CJ ENM |
NOVATECH and CJ ENM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NOVATECH and CJ ENM
The main advantage of trading using opposite NOVATECH and CJ ENM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NOVATECH position performs unexpectedly, CJ ENM 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 ENM will offset losses from the drop in CJ ENM's long position.| NOVATECH vs. Hana Materials | NOVATECH vs. Lake Materials Co | NOVATECH vs. Hyundai Engineering Plastics | NOVATECH vs. WONIK Materials CoLtd |
| CJ ENM vs. Samsung Card Co | CJ ENM vs. EBEST Investment Securities | CJ ENM vs. Koh Young Technology | CJ ENM vs. Hansol Chemica |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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