Correlation Between NOVATECH and CJ Cheiljedang
Can any of the company-specific risk be diversified away by investing in both NOVATECH 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 NOVATECH and CJ Cheiljedang 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 Cheiljedang, you can compare the effects of market volatilities on NOVATECH 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 NOVATECH with a short position of CJ Cheiljedang. Check out your portfolio center. Please also check ongoing floating volatility patterns of NOVATECH and CJ Cheiljedang.
Diversification Opportunities for NOVATECH and CJ Cheiljedang
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NOVATECH and 097950 is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding NOVATECH Co and CJ Cheiljedang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CJ Cheiljedang 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 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 NOVATECH i.e., NOVATECH and CJ Cheiljedang go up and down completely randomly.
Pair Corralation between NOVATECH and CJ Cheiljedang
Assuming the 90 days trading horizon NOVATECH Co is expected to generate 2.12 times more return on investment than CJ Cheiljedang. However, NOVATECH is 2.12 times more volatile than CJ Cheiljedang. It trades about 0.12 of its potential returns per unit of risk. CJ Cheiljedang is currently generating about -0.15 per unit of risk. If you would invest 1,300,000 in NOVATECH Co on November 2, 2024 and sell it today you would earn a total of 639,000 from holding NOVATECH Co or generate 49.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NOVATECH Co vs. CJ Cheiljedang
Performance |
| Timeline |
| NOVATECH |
| CJ Cheiljedang |
NOVATECH and CJ Cheiljedang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NOVATECH and CJ Cheiljedang
The main advantage of trading using opposite NOVATECH and CJ Cheiljedang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NOVATECH 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.| NOVATECH vs. Ecopro BM Co | NOVATECH vs. Sangsin Energy Display | NOVATECH vs. Bosung Power Technology | NOVATECH vs. Busan Industrial Co |
| CJ Cheiljedang vs. Busan Industrial Co | CJ Cheiljedang vs. Busan Ind | CJ Cheiljedang vs. RPBio Inc | CJ Cheiljedang vs. Finebesteel |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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