Correlation Between Daechang Steel and CKH Food
Can any of the company-specific risk be diversified away by investing in both Daechang Steel 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 Daechang Steel and CKH Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daechang Steel Co and CKH Food Health, you can compare the effects of market volatilities on Daechang Steel 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 Daechang Steel with a short position of CKH Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daechang Steel and CKH Food.
Diversification Opportunities for Daechang Steel and CKH Food
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daechang and CKH is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Daechang Steel 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 Daechang Steel 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 Daechang Steel 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 Daechang Steel i.e., Daechang Steel and CKH Food go up and down completely randomly.
Pair Corralation between Daechang Steel and CKH Food
Assuming the 90 days trading horizon Daechang Steel Co is expected to generate 0.73 times more return on investment than CKH Food. However, Daechang Steel Co is 1.36 times less risky than CKH Food. It trades about -0.01 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 211,014 in Daechang Steel Co on October 14, 2024 and sell it today you would lose (5,014) from holding Daechang Steel Co or give up 2.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daechang Steel Co vs. CKH Food Health
Performance |
| Timeline |
| Daechang Steel |
| CKH Food Health |
Daechang Steel and CKH Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daechang Steel and CKH Food
The main advantage of trading using opposite Daechang Steel and CKH Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daechang Steel 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.| Daechang Steel vs. Netmarble Games Corp | Daechang Steel vs. Aprogen Healthcare Games | Daechang Steel vs. Dongbang Transport Logistics | Daechang Steel vs. Chorokbaem Healthcare Co |
| CKH Food vs. Nice Information Telecommunication | CKH Food vs. SK Telecom Co | CKH Food vs. Hironic Co | CKH Food vs. Daechang Steel 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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