Correlation Between Doosan Bobcat and CJ Seafood

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

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

Diversification Opportunities for Doosan Bobcat and CJ Seafood

0.29

Correlation Coefficient

Doosan Bobcat  CJ Seafood

Modest diversification

The 3 months correlation between Doosan and 011150 is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Doosan Bobcat 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 Doosan Bobcat 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 Doosan Bobcat 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 Doosan Bobcat i.e., Doosan Bobcat and CJ Seafood go up and down completely randomly.

Pair Corralation between Doosan Bobcat and CJ Seafood

Assuming the 90 days trading horizon Doosan Bobcat is expected to generate 1.31 times more return on investment than CJ Seafood. However, Doosan Bobcat is 1.31 times more volatile than CJ Seafood Corp. It trades about 0.1 of its potential returns per unit of risk. CJ Seafood Corp is currently generating about 0.01 per unit of risk. If you would invest  4,455,000  in Doosan Bobcat on December 25, 2024 and sell it today you would earn a total of  615,000  from holding Doosan Bobcat or generate 13.8% return on investment over 90 days.

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

Doosan Bobcat  vs.  CJ Seafood Corp

Doosan Bobcat

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Doosan Bobcat are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Doosan Bobcat sustained solid returns over the last few months and may actually be approaching a breakup point.

CJ Seafood Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CJ Seafood Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 Doosan Bobcat and CJ Seafood

The main advantage of trading using opposite Doosan Bobcat and CJ Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Doosan Bobcat 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 Doosan Bobcat 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.