Correlation Between Choil Aluminum and Cheryong Industrial

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

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

Diversification Opportunities for Choil Aluminum and Cheryong Industrial

0.23

Correlation Coefficient

Choil Aluminum  Cheryong Industrial

Modest diversification

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

Pair Corralation between Choil Aluminum and Cheryong Industrial

Assuming the 90 days trading horizon Choil Aluminum is expected to generate 0.36 times more return on investment than Cheryong Industrial. However, Choil Aluminum is 2.75 times less risky than Cheryong Industrial. It trades about 0.15 of its potential returns per unit of risk. Cheryong Industrial CoLtd is currently generating about 0.03 per unit of risk. If you would invest  140,000  in Choil Aluminum on December 25, 2024 and sell it today you would earn a total of  20,700  from holding Choil Aluminum or generate 14.79% return on investment over 90 days.

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

Choil Aluminum  vs.  Cheryong Industrial CoLtd

Choil Aluminum

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Choil Aluminum are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Choil Aluminum sustained solid returns over the last few months and may actually be approaching a breakup point.

Cheryong Industrial CoLtd

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cheryong Industrial CoLtd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cheryong Industrial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Choil Aluminum and Cheryong Industrial

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

The idea behind Choil Aluminum and Cheryong Industrial CoLtd 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.