Correlation Between TSE and CKH Food
Can any of the company-specific risk be diversified away by investing in both TSE 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 TSE and CKH Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TSE Co and CKH Food Health, you can compare the effects of market volatilities on TSE 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 TSE with a short position of CKH Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of TSE and CKH Food.
Diversification Opportunities for TSE and CKH Food
Poor diversification
The 3 months correlation between TSE and CKH is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding TSE Co 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 TSE 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 TSE Co 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 TSE i.e., TSE and CKH Food go up and down completely randomly.
Pair Corralation between TSE and CKH Food
Assuming the 90 days trading horizon TSE Co is expected to generate 1.05 times more return on investment than CKH Food. However, TSE is 1.05 times more volatile than CKH Food Health. It trades about 0.12 of its potential returns per unit of risk. CKH Food Health is currently generating about -0.08 per unit of risk. If you would invest 4,195,000 in TSE Co on October 24, 2024 and sell it today you would earn a total of 230,000 from holding TSE Co or generate 5.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TSE Co vs. CKH Food Health
Performance |
| Timeline |
| TSE Co |
| CKH Food Health |
TSE and CKH Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TSE and CKH Food
The main advantage of trading using opposite TSE and CKH Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TSE 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.| TSE vs. Inzi Display CoLtd | TSE vs. National Plastic Co | TSE vs. Samsung Publishing Co | TSE vs. Kolon Plastics |
| CKH Food vs. UJU Electronics Co | CKH Food vs. Stic Investments | CKH Food vs. Sungmoon Electronics Co | CKH Food vs. Shinil Electronics 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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