Correlation Between System and CKH Food
Can any of the company-specific risk be diversified away by investing in both System 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 System and CKH Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between System and Application and CKH Food Health, you can compare the effects of market volatilities on System 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 System with a short position of CKH Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of System and CKH Food.
Diversification Opportunities for System and CKH Food
Very weak diversification
The 3 months correlation between System and CKH is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding System and Application 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 System 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 System and Application 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 System i.e., System and CKH Food go up and down completely randomly.
Pair Corralation between System and CKH Food
Assuming the 90 days trading horizon System and Application is expected to generate 0.7 times more return on investment than CKH Food. However, System and Application is 1.43 times less risky than CKH Food. It trades about -0.04 of its potential returns per unit of risk. CKH Food Health is currently generating about -0.2 per unit of risk. If you would invest 153,000 in System and Application on August 31, 2024 and sell it today you would lose (6,300) from holding System and Application or give up 4.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
System and Application vs. CKH Food Health
Performance |
| Timeline |
| System and Application |
| CKH Food Health |
System and CKH Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with System and CKH Food
The main advantage of trading using opposite System and CKH Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if System 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.| System vs. Dongsin Engineering Construction | System vs. Doosan Fuel Cell | System vs. Daishin Balance 1 | System vs. Total Soft Bank |
| CKH Food vs. Korea Real Estate | CKH Food vs. Korea Ratings Co | CKH Food vs. IQuest Co | CKH Food vs. Wonbang Tech 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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