Correlation Between Zinus and CJ Seafood

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

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

Diversification Opportunities for Zinus and CJ Seafood

-0.6

Correlation Coefficient

Zinus  CJ Seafood

Excellent diversification

The 3 months correlation between Zinus and 011150 is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Zinus Inc and CJ Seafood Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CJ Seafood Corp and Zinus 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 Zinus Inc are associated (or correlated) with CJ Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CJ Seafood Corp has no effect on the direction of Zinus i.e., Zinus and CJ Seafood go up and down completely randomly.

Pair Corralation between Zinus and CJ Seafood

Assuming the 90 days trading horizon Zinus Inc is expected to generate 0.87 times more return on investment than CJ Seafood. However, Zinus Inc is 1.14 times less risky than CJ Seafood. It trades about 0.32 of its potential returns per unit of risk. CJ Seafood Corp is currently generating about 0.08 per unit of risk. If you would invest  2,180,000  in Zinus Inc on October 6, 2024 and sell it today you would earn a total of  480,000  from holding Zinus Inc or generate 22.02% return on investment over 90 days.

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

Zinus Inc  vs.  CJ Seafood Corp

Zinus Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zinus Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zinus sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Zinus and CJ Seafood

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

The idea behind Zinus Inc and CJ Seafood Corp 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.