Correlation Between CJ Seafood and Namhwa Industrial
Can any of the company-specific risk be diversified away by investing in both CJ Seafood and Namhwa Industrial 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 Namhwa Industrial 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 Namhwa Industrial Co, you can compare the effects of market volatilities on CJ Seafood and Namhwa Industrial 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 Namhwa Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CJ Seafood and Namhwa Industrial.
Diversification Opportunities for CJ Seafood and Namhwa Industrial
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 011150 and Namhwa is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding CJ Seafood Corp and Namhwa Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhwa Industrial 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 Namhwa Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhwa Industrial has no effect on the direction of CJ Seafood i.e., CJ Seafood and Namhwa Industrial go up and down completely randomly.
Pair Corralation between CJ Seafood and Namhwa Industrial
Assuming the 90 days trading horizon CJ Seafood Corp is expected to under-perform the Namhwa Industrial. In addition to that, CJ Seafood is 1.53 times more volatile than Namhwa Industrial Co. It trades about -0.02 of its total potential returns per unit of risk. Namhwa Industrial Co is currently generating about 0.07 per unit of volatility. If you would invest 471,750 in Namhwa Industrial Co on October 11, 2024 and sell it today you would earn a total of 34,250 from holding Namhwa Industrial Co or generate 7.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
CJ Seafood Corp vs. Namhwa Industrial Co
Performance |
Timeline |
CJ Seafood Corp |
Namhwa Industrial |
CJ Seafood and Namhwa Industrial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CJ Seafood and Namhwa Industrial
The main advantage of trading using opposite CJ Seafood and Namhwa Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CJ Seafood position performs unexpectedly, Namhwa Industrial 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 Namhwa Industrial will offset losses from the drop in Namhwa Industrial's long position.CJ Seafood vs. Daou Technology | ||
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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