Correlation Between Seoul Food and CKH Food
Can any of the company-specific risk be diversified away by investing in both Seoul Food 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 Seoul Food and CKH Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seoul Food Industrial and CKH Food Health, you can compare the effects of market volatilities on Seoul Food 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 Seoul Food with a short position of CKH Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Food and CKH Food.
Diversification Opportunities for Seoul Food and CKH Food
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Seoul and CKH is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Food Industrial 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 Seoul Food 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 Seoul Food Industrial 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 Seoul Food i.e., Seoul Food and CKH Food go up and down completely randomly.
Pair Corralation between Seoul Food and CKH Food
Assuming the 90 days trading horizon Seoul Food Industrial is expected to under-perform the CKH Food. But the stock apears to be less risky and, when comparing its historical volatility, Seoul Food Industrial is 1.48 times less risky than CKH Food. The stock trades about -0.23 of its potential returns per unit of risk. The CKH Food Health is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest 6,400 in CKH Food Health on November 9, 2024 and sell it today you would lose (300.00) from holding CKH Food Health or give up 4.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Food Industrial vs. CKH Food Health
Performance |
| Timeline |
| Seoul Food Industrial |
| CKH Food Health |
Seoul Food and CKH Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Food and CKH Food
The main advantage of trading using opposite Seoul Food and CKH Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Food 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.| Seoul Food vs. SK Telecom Co | Seoul Food vs. Kakao Games Corp | Seoul Food vs. LG Household Healthcare | Seoul Food vs. Digital Power Communications |
| CKH Food vs. Ssangyong Information Communication | CKH Food vs. Nice Information Telecommunication | CKH Food vs. NewFlex Technology Co | CKH Food vs. BIT Computer 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 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.
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