Correlation Between NAU IB and CJ Cheiljedang

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

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

Diversification Opportunities for NAU IB and CJ Cheiljedang

-0.2

Correlation Coefficient

NAU IB  CJ Cheiljedang

Good diversification

The 3 months correlation between NAU and 097950 is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding NAU IB Capital and CJ Cheiljedang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CJ Cheiljedang and NAU IB 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 NAU IB Capital are associated (or correlated) with CJ Cheiljedang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CJ Cheiljedang has no effect on the direction of NAU IB i.e., NAU IB and CJ Cheiljedang go up and down completely randomly.

Pair Corralation between NAU IB and CJ Cheiljedang

Assuming the 90 days trading horizon NAU IB Capital is expected to under-perform the CJ Cheiljedang. In addition to that, NAU IB is 2.87 times more volatile than CJ Cheiljedang. It trades about -0.01 of its total potential returns per unit of risk. CJ Cheiljedang is currently generating about 0.03 per unit of volatility. If you would invest  26,129,400  in CJ Cheiljedang on December 24, 2024 and sell it today you would earn a total of  720,600  from holding CJ Cheiljedang or generate 2.76% return on investment over 90 days.

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

NAU IB Capital  vs.  CJ Cheiljedang

NAU IB Capital

Risk-Adjusted Performance

Very Weak

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

CJ Cheiljedang

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CJ Cheiljedang are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CJ Cheiljedang is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NAU IB and CJ Cheiljedang

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

The idea behind NAU IB Capital and CJ Cheiljedang 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.