Correlation Between CJ ENM and AhnLab

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

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

Diversification Opportunities for CJ ENM and AhnLab

-0.72

Correlation Coefficient

CJ ENM  AhnLab

Pay attention - limited upside

The 3 months correlation between 035760 and AhnLab is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding CJ ENM and AhnLab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AhnLab Inc and CJ ENM 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 CJ ENM are associated (or correlated) with AhnLab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AhnLab Inc has no effect on the direction of CJ ENM i.e., CJ ENM and AhnLab go up and down completely randomly.

Pair Corralation between CJ ENM and AhnLab

Assuming the 90 days trading horizon CJ ENM is expected to under-perform the AhnLab. In addition to that, CJ ENM is 1.13 times more volatile than AhnLab Inc. It trades about -0.05 of its total potential returns per unit of risk. AhnLab Inc is currently generating about 0.09 per unit of volatility. If you would invest  5,370,000  in AhnLab Inc on September 2, 2024 and sell it today you would earn a total of  600,000  from holding AhnLab Inc or generate 11.17% return on investment over 90 days.

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

CJ ENM  vs.  AhnLab Inc

CJ ENM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CJ ENM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

AhnLab Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AhnLab Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AhnLab sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CJ ENM and AhnLab

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

The idea behind CJ ENM and AhnLab Inc 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.