Correlation Between Coloray International and CJ Cheiljedang

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

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

Diversification Opportunities for Coloray International and CJ Cheiljedang

-0.27

Correlation Coefficient

Coloray International  CJ Cheiljedang

Very good diversification

The 3 months correlation between Coloray and 097950 is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Coloray International Investme and CJ Cheiljedang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CJ Cheiljedang and Coloray International 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 Coloray International Investment 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 Coloray International i.e., Coloray International and CJ Cheiljedang go up and down completely randomly.

Pair Corralation between Coloray International and CJ Cheiljedang

Assuming the 90 days trading horizon Coloray International Investment is expected to generate 1.21 times more return on investment than CJ Cheiljedang. However, Coloray International is 1.21 times more volatile than CJ Cheiljedang. It trades about 0.05 of its potential returns per unit of risk. CJ Cheiljedang is currently generating about -0.11 per unit of risk. If you would invest  66,800  in Coloray International Investment on October 26, 2024 and sell it today you would earn a total of  4,500  from holding Coloray International Investment or generate 6.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Coloray International Investme  vs.  CJ Cheiljedang

Coloray International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coloray International Investment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Coloray International may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CJ Cheiljedang

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CJ Cheiljedang 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.

Pair Trading with Coloray International and CJ Cheiljedang

The main advantage of trading using opposite Coloray International and CJ Cheiljedang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coloray International 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 Coloray International Investment 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.