Correlation Between CKH Food and Hanshin Construction
Can any of the company-specific risk be diversified away by investing in both CKH Food and Hanshin Construction 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 Hanshin Construction 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 Hanshin Construction Co, you can compare the effects of market volatilities on CKH Food and Hanshin Construction 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 Hanshin Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of CKH Food and Hanshin Construction.
Diversification Opportunities for CKH Food and Hanshin Construction
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CKH and Hanshin is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding CKH Food Health and Hanshin Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanshin Construction 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 Hanshin Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanshin Construction has no effect on the direction of CKH Food i.e., CKH Food and Hanshin Construction go up and down completely randomly.
Pair Corralation between CKH Food and Hanshin Construction
Assuming the 90 days trading horizon CKH Food Health is expected to under-perform the Hanshin Construction. In addition to that, CKH Food is 1.81 times more volatile than Hanshin Construction Co. It trades about -0.05 of its total potential returns per unit of risk. Hanshin Construction Co is currently generating about -0.08 per unit of volatility. If you would invest 675,543 in Hanshin Construction Co on October 14, 2024 and sell it today you would lose (16,543) from holding Hanshin Construction Co or give up 2.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CKH Food Health vs. Hanshin Construction Co
Performance |
| Timeline |
| CKH Food Health |
| Hanshin Construction |
CKH Food and Hanshin Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CKH Food and Hanshin Construction
The main advantage of trading using opposite CKH Food and Hanshin Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CKH Food position performs unexpectedly, Hanshin Construction 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 Hanshin Construction will offset losses from the drop in Hanshin Construction's long position.| CKH Food vs. Nice Information Telecommunication | CKH Food vs. SK Telecom Co | CKH Food vs. Hironic Co | CKH Food vs. Daechang Steel Co |
| Hanshin Construction vs. BGF Retail Co | Hanshin Construction vs. Lotte Chilsung Beverage | Hanshin Construction vs. Heungkuk Metaltech CoLtd | Hanshin Construction vs. Haitai Confectionery Foods |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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