Correlation Between Kumho Petro and CKH Food
Can any of the company-specific risk be diversified away by investing in both Kumho Petro 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 Kumho Petro and CKH Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kumho Petro Chemical and CKH Food Health, you can compare the effects of market volatilities on Kumho Petro 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 Kumho Petro with a short position of CKH Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumho Petro and CKH Food.
Diversification Opportunities for Kumho Petro and CKH Food
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Kumho and CKH is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Kumho Petro Chemical 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 Kumho Petro 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 Kumho Petro Chemical 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 Kumho Petro i.e., Kumho Petro and CKH Food go up and down completely randomly.
Pair Corralation between Kumho Petro and CKH Food
Assuming the 90 days trading horizon Kumho Petro Chemical is expected to generate 0.72 times more return on investment than CKH Food. However, Kumho Petro Chemical is 1.4 times less risky than CKH Food. It trades about -0.18 of its potential returns per unit of risk. CKH Food Health is currently generating about -0.15 per unit of risk. If you would invest 5,220,000 in Kumho Petro Chemical on October 1, 2024 and sell it today you would lose (400,000) from holding Kumho Petro Chemical or give up 7.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kumho Petro Chemical vs. CKH Food Health
Performance |
| Timeline |
| Kumho Petro Chemical |
| CKH Food Health |
Kumho Petro and CKH Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kumho Petro and CKH Food
The main advantage of trading using opposite Kumho Petro and CKH Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumho Petro 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.| Kumho Petro vs. Kumho Petro Chemical | Kumho Petro vs. SKC Co | Kumho Petro vs. SK Chemicals Co | Kumho Petro vs. SK Chemicals Co |
| CKH Food vs. Nam Hwa Construction | CKH Food vs. Digital Imaging Technology | CKH Food vs. GS Engineering Construction | CKH Food vs. Cots Technology 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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