Correlation Between CKH Food and Kumho Ind
Can any of the company-specific risk be diversified away by investing in both CKH Food and Kumho Ind 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 CKH Food and Kumho Ind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CKH Food Health and Kumho Ind, you can compare the effects of market volatilities on CKH Food and Kumho Ind 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 CKH Food with a short position of Kumho Ind. Check out your portfolio center. Please also check ongoing floating volatility patterns of CKH Food and Kumho Ind.
Diversification Opportunities for CKH Food and Kumho Ind
Poor diversification
The 3 months correlation between CKH and Kumho is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding CKH Food Health and Kumho Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kumho Ind and CKH Food 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 CKH Food Health are associated (or correlated) with Kumho Ind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kumho Ind has no effect on the direction of CKH Food i.e., CKH Food and Kumho Ind go up and down completely randomly.
Pair Corralation between CKH Food and Kumho Ind
Assuming the 90 days trading horizon CKH Food Health is expected to under-perform the Kumho Ind. But the stock apears to be less risky and, when comparing its historical volatility, CKH Food Health is 1.61 times less risky than Kumho Ind. The stock trades about -0.29 of its potential returns per unit of risk. The Kumho Ind is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 278,000 in Kumho Ind on September 12, 2024 and sell it today you would lose (4,000) from holding Kumho Ind or give up 1.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CKH Food Health vs. Kumho Ind
Performance |
| Timeline |
| CKH Food Health |
| Kumho Ind |
CKH Food and Kumho Ind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CKH Food and Kumho Ind
The main advantage of trading using opposite CKH Food and Kumho Ind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CKH Food position performs unexpectedly, Kumho Ind 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 Kumho Ind will offset losses from the drop in Kumho Ind's long position.| CKH Food vs. Korea New Network | CKH Food vs. ICD Co | CKH Food vs. DYPNF CoLtd | CKH Food vs. Solution Advanced Technology |
| Kumho Ind vs. CKH Food Health | Kumho Ind vs. Samyang Foods Co | Kumho Ind vs. Shinsung Delta Tech | Kumho Ind vs. Seoul Food Industrial |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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