Correlation Between LG Chemicals and CKH Food
Can any of the company-specific risk be diversified away by investing in both LG Chemicals 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 LG Chemicals and CKH Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Chemicals and CKH Food Health, you can compare the effects of market volatilities on LG Chemicals 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 LG Chemicals with a short position of CKH Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Chemicals and CKH Food.
Diversification Opportunities for LG Chemicals and CKH Food
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between 051910 and CKH is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding LG Chemicals 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 LG Chemicals 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 LG Chemicals 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 LG Chemicals i.e., LG Chemicals and CKH Food go up and down completely randomly.
Pair Corralation between LG Chemicals and CKH Food
Assuming the 90 days trading horizon LG Chemicals is expected to under-perform the CKH Food. In addition to that, LG Chemicals is 1.19 times more volatile than CKH Food Health. It trades about -0.17 of its total potential returns per unit of risk. CKH Food Health is currently generating about -0.15 per unit of volatility. If you would invest 6,500 in CKH Food Health on November 4, 2024 and sell it today you would lose (300.00) from holding CKH Food Health or give up 4.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Chemicals vs. CKH Food Health
Performance |
| Timeline |
| LG Chemicals |
| CKH Food Health |
LG Chemicals and CKH Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Chemicals and CKH Food
The main advantage of trading using opposite LG Chemicals and CKH Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Chemicals 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.| LG Chemicals vs. Samhyun Steel Co | LG Chemicals vs. INSUN Environmental New | LG Chemicals vs. Nature and Environment | LG Chemicals vs. Hankook Steel Co |
| CKH Food vs. Kg Chemical | CKH Food vs. Daishin Information Communications | CKH Food vs. SK Telecom Co | CKH Food vs. ECSTELECOM 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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