Correlation Between Korean Air and CKH Food
Can any of the company-specific risk be diversified away by investing in both Korean Air and CKH Food 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 Korean Air and CKH Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korean Air Lines and CKH Food Health, you can compare the effects of market volatilities on Korean Air and CKH Food 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 Korean Air with a short position of CKH Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Air and CKH Food.
Diversification Opportunities for Korean Air and CKH Food
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Korean and CKH is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Korean Air Lines and CKH Food Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CKH Food Health and Korean Air 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 Korean Air Lines are associated (or correlated) with CKH Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CKH Food Health has no effect on the direction of Korean Air i.e., Korean Air and CKH Food go up and down completely randomly.
Pair Corralation between Korean Air and CKH Food
Assuming the 90 days trading horizon Korean Air Lines is expected to generate 0.45 times more return on investment than CKH Food. However, Korean Air Lines is 2.22 times less risky than CKH Food. It trades about 0.03 of its potential returns per unit of risk. CKH Food Health is currently generating about -0.05 per unit of risk. If you would invest 2,257,188 in Korean Air Lines on September 12, 2024 and sell it today you would earn a total of 167,812 from holding Korean Air Lines or generate 7.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korean Air Lines vs. CKH Food Health
Performance |
| Timeline |
| Korean Air Lines |
| CKH Food Health |
Korean Air and CKH Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Air and CKH Food
The main advantage of trading using opposite Korean Air and CKH Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Air position performs unexpectedly, CKH Food 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 CKH Food will offset losses from the drop in CKH Food's long position.| Korean Air vs. Korea New Network | Korean Air vs. Solution Advanced Technology | Korean Air vs. Busan Industrial Co | Korean Air vs. Busan Ind |
| CKH Food vs. Korea New Network | CKH Food vs. ICD Co | CKH Food vs. DYPNF CoLtd | CKH Food vs. Solution Advanced Technology |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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