Correlation Between Korean Reinsurance and CKH Food
Can any of the company-specific risk be diversified away by investing in both Korean Reinsurance 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 Reinsurance 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 Reinsurance Co and CKH Food Health, you can compare the effects of market volatilities on Korean Reinsurance 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 Reinsurance with a short position of CKH Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Reinsurance and CKH Food.
Diversification Opportunities for Korean Reinsurance and CKH Food
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korean and CKH is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Korean Reinsurance Co 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 Reinsurance 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 Reinsurance Co 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 Reinsurance i.e., Korean Reinsurance and CKH Food go up and down completely randomly.
Pair Corralation between Korean Reinsurance and CKH Food
Assuming the 90 days trading horizon Korean Reinsurance Co is expected to generate 0.45 times more return on investment than CKH Food. However, Korean Reinsurance Co is 2.2 times less risky than CKH Food. It trades about -0.13 of its potential returns per unit of risk. CKH Food Health is currently generating about -0.37 per unit of risk. If you would invest 824,000 in Korean Reinsurance Co on December 1, 2024 and sell it today you would lose (20,000) from holding Korean Reinsurance Co or give up 2.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korean Reinsurance Co vs. CKH Food Health
Performance |
| Timeline |
| Korean Reinsurance |
| CKH Food Health |
Korean Reinsurance and CKH Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Reinsurance and CKH Food
The main advantage of trading using opposite Korean Reinsurance and CKH Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Reinsurance 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 Reinsurance vs. MNtech Co | Korean Reinsurance vs. SS TECH | Korean Reinsurance vs. Korea Steel Co | Korean Reinsurance vs. Hanyang Digitech Co |
| CKH Food vs. Hotel Shilla Co | CKH Food vs. Samsung Publishing Co | CKH Food vs. SBI Investment KOREA | CKH Food vs. SK Chemicals Co |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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