Correlation Between CJ Cheiljedang and Hyundai Industrial

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

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

Diversification Opportunities for CJ Cheiljedang and Hyundai Industrial

0.91

Correlation Coefficient

CJ Cheiljedang  Hyundai Industrial

Almost no diversification

The 3 months correlation between 097950 and Hyundai is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding CJ Cheiljedang and Hyundai Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Industrial and CJ Cheiljedang 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 Cheiljedang are associated (or correlated) with Hyundai Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Industrial has no effect on the direction of CJ Cheiljedang i.e., CJ Cheiljedang and Hyundai Industrial go up and down completely randomly.

Pair Corralation between CJ Cheiljedang and Hyundai Industrial

Assuming the 90 days trading horizon CJ Cheiljedang is expected to generate 1.36 times more return on investment than Hyundai Industrial. However, CJ Cheiljedang is 1.36 times more volatile than Hyundai Industrial Co. It trades about -0.11 of its potential returns per unit of risk. Hyundai Industrial Co is currently generating about -0.18 per unit of risk. If you would invest  31,349,400  in CJ Cheiljedang on September 12, 2024 and sell it today you would lose (4,849,400) from holding CJ Cheiljedang or give up 15.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.31%
Values	Daily Returns

CJ Cheiljedang  vs.  Hyundai Industrial Co

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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Hyundai Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyundai Industrial Co 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with CJ Cheiljedang and Hyundai Industrial

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

The idea behind CJ Cheiljedang and Hyundai Industrial Co 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.