Correlation Between CJ Seafood and Shinhan WTI

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

Diversification Opportunities for CJ Seafood and Shinhan WTI

0.36

Correlation Coefficient

CJ Seafood  Shinhan WTI

Weak diversification

The 3 months correlation between 011155 and Shinhan is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding CJ Seafood Corp and Shinhan WTI Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan WTI Futures 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 Shinhan WTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan WTI Futures has no effect on the direction of CJ Seafood i.e., CJ Seafood and Shinhan WTI go up and down completely randomly.

Pair Corralation between CJ Seafood and Shinhan WTI

Assuming the 90 days trading horizon CJ Seafood Corp is expected to under-perform the Shinhan WTI. But the stock apears to be less risky and, when comparing its historical volatility, CJ Seafood Corp is 1.16 times less risky than Shinhan WTI. The stock trades about -0.16 of its potential returns per unit of risk. The Shinhan WTI Futures is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  737,500  in Shinhan WTI Futures on August 31, 2024 and sell it today you would lose (22,500) from holding Shinhan WTI Futures or give up 3.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.28%
Values	Daily Returns

CJ Seafood Corp  vs.  Shinhan WTI Futures

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Shinhan WTI Futures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shinhan WTI Futures has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Shinhan WTI 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 Shinhan WTI

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

The idea behind CJ Seafood Corp and Shinhan WTI Futures 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..