Correlation Between Nable Communications and CJ Seafood

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

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

Diversification Opportunities for Nable Communications and CJ Seafood

0.32

Correlation Coefficient

Nable Communications  CJ Seafood

Weak diversification

The 3 months correlation between Nable and 011155 is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Nable Communications and CJ Seafood Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CJ Seafood Corp and Nable Communications 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 Nable Communications are associated (or correlated) with CJ Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CJ Seafood Corp has no effect on the direction of Nable Communications i.e., Nable Communications and CJ Seafood go up and down completely randomly.

Pair Corralation between Nable Communications and CJ Seafood

Assuming the 90 days trading horizon Nable Communications is expected to generate 3.06 times less return on investment than CJ Seafood. But when comparing it to its historical volatility, Nable Communications is 5.81 times less risky than CJ Seafood. It trades about 0.09 of its potential returns per unit of risk. CJ Seafood Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,775,000  in CJ Seafood Corp on September 29, 2024 and sell it today you would earn a total of  126,000  from holding CJ Seafood Corp or generate 7.1% return on investment over 90 days.

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

Nable Communications  vs.  CJ Seafood Corp

Nable Communications

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nable Communications are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nable Communications may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CJ Seafood Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CJ Seafood Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CJ Seafood sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nable Communications and CJ Seafood

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

The idea behind Nable Communications and CJ Seafood Corp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.