Correlation Between Tehmag Foods and CKM Building
Can any of the company-specific risk be diversified away by investing in both Tehmag Foods and CKM Building 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 Tehmag Foods and CKM Building into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tehmag Foods and CKM Building Material, you can compare the effects of market volatilities on Tehmag Foods and CKM Building 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 Tehmag Foods with a short position of CKM Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tehmag Foods and CKM Building.
Diversification Opportunities for Tehmag Foods and CKM Building
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tehmag and CKM is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Tehmag Foods and CKM Building Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CKM Building Material and Tehmag Foods 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 Tehmag Foods are associated (or correlated) with CKM Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CKM Building Material has no effect on the direction of Tehmag Foods i.e., Tehmag Foods and CKM Building go up and down completely randomly.
Pair Corralation between Tehmag Foods and CKM Building
Assuming the 90 days trading horizon Tehmag Foods is expected to generate 0.46 times more return on investment than CKM Building. However, Tehmag Foods is 2.19 times less risky than CKM Building. It trades about 0.28 of its potential returns per unit of risk. CKM Building Material is currently generating about 0.1 per unit of risk. If you would invest 30,550 in Tehmag Foods on October 12, 2024 and sell it today you would earn a total of 1,050 from holding Tehmag Foods or generate 3.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tehmag Foods vs. CKM Building Material
Performance |
| Timeline |
| Tehmag Foods |
| CKM Building Material |
Tehmag Foods and CKM Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tehmag Foods and CKM Building
The main advantage of trading using opposite Tehmag Foods and CKM Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tehmag Foods position performs unexpectedly, CKM Building 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 CKM Building will offset losses from the drop in CKM Building's long position.| Tehmag Foods vs. DingZing Advanced Materials | Tehmag Foods vs. Grand Plastic Technology | Tehmag Foods vs. Hwa Fong Rubber | Tehmag Foods vs. ThinTech Materials Technology |
| CKM Building vs. Oceanic Beverages Co | CKM Building vs. GameSparcs Co | CKM Building vs. Tehmag Foods | CKM Building vs. Galaxy Software Services |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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