Correlation Between Semyung Electric and CJ Seafood

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

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

Diversification Opportunities for Semyung Electric and CJ Seafood

0.78

Correlation Coefficient

Semyung Electric  CJ Seafood

Poor diversification

The 3 months correlation between Semyung and 011150 is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Semyung Electric Machinery 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 Semyung Electric 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 Semyung Electric Machinery 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 Semyung Electric i.e., Semyung Electric and CJ Seafood go up and down completely randomly.

Pair Corralation between Semyung Electric and CJ Seafood

Assuming the 90 days trading horizon Semyung Electric Machinery is expected to generate 0.72 times more return on investment than CJ Seafood. However, Semyung Electric Machinery is 1.39 times less risky than CJ Seafood. It trades about 0.35 of its potential returns per unit of risk. CJ Seafood Corp is currently generating about 0.11 per unit of risk. If you would invest  410,682  in Semyung Electric Machinery on October 11, 2024 and sell it today you would earn a total of  81,818  from holding Semyung Electric Machinery or generate 19.92% return on investment over 90 days.

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

Semyung Electric Machinery  vs.  CJ Seafood Corp

Semyung Electric Mac

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Semyung Electric Machinery 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.

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 Semyung Electric and CJ Seafood

The main advantage of trading using opposite Semyung Electric and CJ Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semyung Electric 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 Semyung Electric Machinery 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.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.