Correlation Between CG Hi and SEOJEON ELECTRIC

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

By analyzing existing cross correlation between CG Hi Tech and SEOJEON ELECTRIC MACHINERY, you can compare the effects of market volatilities on CG Hi and SEOJEON ELECTRIC 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 CG Hi with a short position of SEOJEON ELECTRIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of CG Hi and SEOJEON ELECTRIC.

Diversification Opportunities for CG Hi and SEOJEON ELECTRIC

0.57

Correlation Coefficient

CG Hi  SEOJEON ELECTRIC

Very weak diversification

The 3 months correlation between 264660 and SEOJEON is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding CG Hi Tech and SEOJEON ELECTRIC MACHINERY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEOJEON ELECTRIC MAC and CG Hi 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 CG Hi Tech are associated (or correlated) with SEOJEON ELECTRIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEOJEON ELECTRIC MAC has no effect on the direction of CG Hi i.e., CG Hi and SEOJEON ELECTRIC go up and down completely randomly.

Pair Corralation between CG Hi and SEOJEON ELECTRIC

Assuming the 90 days trading horizon CG Hi Tech is expected to generate 1.22 times more return on investment than SEOJEON ELECTRIC. However, CG Hi is 1.22 times more volatile than SEOJEON ELECTRIC MACHINERY. It trades about 0.33 of its potential returns per unit of risk. SEOJEON ELECTRIC MACHINERY is currently generating about 0.13 per unit of risk. If you would invest  892,079  in CG Hi Tech on October 12, 2024 and sell it today you would earn a total of  170,921  from holding CG Hi Tech or generate 19.16% return on investment over 90 days.

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

CG Hi Tech  vs.  SEOJEON ELECTRIC MACHINERY

CG Hi Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CG Hi Tech 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.

SEOJEON ELECTRIC MAC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SEOJEON ELECTRIC MACHINERY are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SEOJEON ELECTRIC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CG Hi and SEOJEON ELECTRIC

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

The idea behind CG Hi Tech and SEOJEON ELECTRIC MACHINERY 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.