Correlation Between CJ Seafood and Daebo Magnetic

Can any of the company-specific risk be diversified away by investing in both CJ Seafood and Daebo Magnetic 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 Daebo Magnetic 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 Daebo Magnetic CoLtd, you can compare the effects of market volatilities on CJ Seafood and Daebo Magnetic 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 Daebo Magnetic. Check out your portfolio center. Please also check ongoing floating volatility patterns of CJ Seafood and Daebo Magnetic.

Diversification Opportunities for CJ Seafood and Daebo Magnetic

0.15

Correlation Coefficient

CJ Seafood  Daebo Magnetic

Average diversification

The 3 months correlation between 011150 and Daebo is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding CJ Seafood Corp and Daebo Magnetic CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daebo Magnetic CoLtd 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 Daebo Magnetic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daebo Magnetic CoLtd has no effect on the direction of CJ Seafood i.e., CJ Seafood and Daebo Magnetic go up and down completely randomly.

Pair Corralation between CJ Seafood and Daebo Magnetic

Assuming the 90 days trading horizon CJ Seafood is expected to generate 1.69 times less return on investment than Daebo Magnetic. But when comparing it to its historical volatility, CJ Seafood Corp is 1.52 times less risky than Daebo Magnetic. It trades about 0.04 of its potential returns per unit of risk. Daebo Magnetic CoLtd is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,224,000  in Daebo Magnetic CoLtd on December 4, 2024 and sell it today you would earn a total of  82,000  from holding Daebo Magnetic CoLtd or generate 6.7% return on investment over 90 days.

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

CJ Seafood Corp  vs.  Daebo Magnetic CoLtd

CJ Seafood Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CJ Seafood Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CJ Seafood may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Daebo Magnetic CoLtd

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Daebo Magnetic CoLtd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daebo Magnetic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CJ Seafood and Daebo Magnetic

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

The idea behind CJ Seafood Corp and Daebo Magnetic CoLtd 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.