Correlation Between Kukdong Oil and CJ Seafood

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

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

Diversification Opportunities for Kukdong Oil and CJ Seafood

0.65

Correlation Coefficient

Kukdong Oil  CJ Seafood

Poor diversification

The 3 months correlation between Kukdong and 011150 is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Kukdong Oil Chemicals 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 Kukdong Oil 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 Kukdong Oil Chemicals 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 Kukdong Oil i.e., Kukdong Oil and CJ Seafood go up and down completely randomly.

Pair Corralation between Kukdong Oil and CJ Seafood

Assuming the 90 days trading horizon Kukdong Oil Chemicals is expected to under-perform the CJ Seafood. But the stock apears to be less risky and, when comparing its historical volatility, Kukdong Oil Chemicals is 2.07 times less risky than CJ Seafood. The stock trades about -0.01 of its potential returns per unit of risk. The CJ Seafood Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  293,500  in CJ Seafood Corp on October 22, 2024 and sell it today you would earn a total of  8,500  from holding CJ Seafood Corp or generate 2.9% return on investment over 90 days.

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

Kukdong Oil Chemicals  vs.  CJ Seafood Corp

Kukdong Oil Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 somewhat strong basic indicators, CJ Seafood is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kukdong Oil and CJ Seafood

The main advantage of trading using opposite Kukdong Oil and CJ Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukdong Oil 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 Kukdong Oil Chemicals 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..