Correlation Between CJ Seafood and Seoam Machinery

Can any of the company-specific risk be diversified away by investing in both CJ Seafood and Seoam Machinery 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 CJ Seafood and Seoam Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CJ Seafood Corp and Seoam Machinery Industry, you can compare the effects of market volatilities on CJ Seafood and Seoam Machinery 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 CJ Seafood with a short position of Seoam Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of CJ Seafood and Seoam Machinery.

Diversification Opportunities for CJ Seafood and Seoam Machinery

0.53

Correlation Coefficient

CJ Seafood  Seoam Machinery

Very weak diversification

The 3 months correlation between 011150 and Seoam is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding CJ Seafood Corp and Seoam Machinery Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoam Machinery Industry and CJ Seafood 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 CJ Seafood Corp are associated (or correlated) with Seoam Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoam Machinery Industry has no effect on the direction of CJ Seafood i.e., CJ Seafood and Seoam Machinery go up and down completely randomly.

Pair Corralation between CJ Seafood and Seoam Machinery

Assuming the 90 days trading horizon CJ Seafood is expected to generate 1.97 times less return on investment than Seoam Machinery. In addition to that, CJ Seafood is 1.38 times more volatile than Seoam Machinery Industry. It trades about 0.15 of its total potential returns per unit of risk. Seoam Machinery Industry is currently generating about 0.42 per unit of volatility. If you would invest  306,952  in Seoam Machinery Industry on October 10, 2024 and sell it today you would earn a total of  74,048  from holding Seoam Machinery Industry or generate 24.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

CJ Seafood Corp  vs.  Seoam Machinery Industry

CJ Seafood Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CJ Seafood Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Seoam Machinery Industry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seoam Machinery Industry has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Seoam Machinery is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CJ Seafood and Seoam Machinery

The main advantage of trading using opposite CJ Seafood and Seoam Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CJ Seafood position performs unexpectedly, Seoam Machinery 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 Seoam Machinery will offset losses from the drop in Seoam Machinery's long position.

The idea behind CJ Seafood Corp and Seoam Machinery Industry pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.