Correlation Between Choil Aluminum and Celltrion

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

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

Diversification Opportunities for Choil Aluminum and Celltrion

0.23

Correlation Coefficient

Choil Aluminum  Celltrion

Modest diversification

The 3 months correlation between Choil and Celltrion is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Choil Aluminum and Celltrion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celltrion and Choil Aluminum 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 Choil Aluminum are associated (or correlated) with Celltrion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celltrion has no effect on the direction of Choil Aluminum i.e., Choil Aluminum and Celltrion go up and down completely randomly.

Pair Corralation between Choil Aluminum and Celltrion

Assuming the 90 days trading horizon Choil Aluminum is expected to under-perform the Celltrion. In addition to that, Choil Aluminum is 1.23 times more volatile than Celltrion. It trades about -0.09 of its total potential returns per unit of risk. Celltrion is currently generating about -0.01 per unit of volatility. If you would invest  19,016,700  in Celltrion on October 15, 2024 and sell it today you would lose (506,700) from holding Celltrion or give up 2.66% of portfolio value over 90 days.

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

Choil Aluminum  vs.  Celltrion

Choil Aluminum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Choil Aluminum 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Celltrion

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Choil Aluminum and Celltrion

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

The idea behind Choil Aluminum and Celltrion 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.