Correlation Between InnoTherapy and CKH Food
Can any of the company-specific risk be diversified away by investing in both InnoTherapy 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 InnoTherapy and CKH Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InnoTherapy and CKH Food Health, you can compare the effects of market volatilities on InnoTherapy 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 InnoTherapy with a short position of CKH Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of InnoTherapy and CKH Food.
Diversification Opportunities for InnoTherapy and CKH Food
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between InnoTherapy and CKH is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding InnoTherapy 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 InnoTherapy 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 InnoTherapy 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 InnoTherapy i.e., InnoTherapy and CKH Food go up and down completely randomly.
Pair Corralation between InnoTherapy and CKH Food
Assuming the 90 days trading horizon InnoTherapy is expected to generate 0.48 times more return on investment than CKH Food. However, InnoTherapy is 2.09 times less risky than CKH Food. It trades about -0.12 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 900,000 in InnoTherapy on August 30, 2024 and sell it today you would lose (68,000) from holding InnoTherapy or give up 7.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
InnoTherapy vs. CKH Food Health
Performance |
| Timeline |
| InnoTherapy |
| CKH Food Health |
InnoTherapy and CKH Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InnoTherapy and CKH Food
The main advantage of trading using opposite InnoTherapy and CKH Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InnoTherapy 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.| InnoTherapy vs. AnterogenCoLtd | InnoTherapy vs. Busan Industrial Co | InnoTherapy vs. Busan Ind | InnoTherapy vs. Shinhan WTI Futures |
| CKH Food vs. Samsung Electronics Co | CKH Food vs. Samsung Electronics Co | CKH Food vs. Hyundai Motor Co | CKH Food vs. Hyundai Motor |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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