Correlation Between SK Chemicals and CKH Food
Can any of the company-specific risk be diversified away by investing in both SK Chemicals 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 SK Chemicals and CKH Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Chemicals Co and CKH Food Health, you can compare the effects of market volatilities on SK Chemicals 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 SK Chemicals with a short position of CKH Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Chemicals and CKH Food.
Diversification Opportunities for SK Chemicals and CKH Food
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 285130 and CKH is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding SK Chemicals 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 SK Chemicals 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 SK Chemicals 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 SK Chemicals i.e., SK Chemicals and CKH Food go up and down completely randomly.
Pair Corralation between SK Chemicals and CKH Food
Assuming the 90 days trading horizon SK Chemicals Co is expected to under-perform the CKH Food. But the stock apears to be less risky and, when comparing its historical volatility, SK Chemicals Co is 1.3 times less risky than CKH Food. The stock trades about -0.27 of its potential returns per unit of risk. The CKH Food Health is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 6,400 in CKH Food Health on November 3, 2024 and sell it today you would lose (200.00) from holding CKH Food Health or give up 3.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Chemicals Co vs. CKH Food Health
Performance |
| Timeline |
| SK Chemicals |
| CKH Food Health |
SK Chemicals and CKH Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Chemicals and CKH Food
The main advantage of trading using opposite SK Chemicals and CKH Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Chemicals 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.| SK Chemicals vs. WONIK Materials CoLtd | SK Chemicals vs. Aprogen Healthcare Games | SK Chemicals vs. EV Advanced Material | SK Chemicals vs. Daejoo Electronic Materials |
| CKH Food vs. Kg Chemical | CKH Food vs. Daishin Information Communications | CKH Food vs. SK Telecom Co | CKH Food vs. ECSTELECOM 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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