Correlation Between CKH Food and Hanwha Chemical
Can any of the company-specific risk be diversified away by investing in both CKH Food and Hanwha Chemical 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 Hanwha Chemical 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 Hanwha Chemical Corp, you can compare the effects of market volatilities on CKH Food and Hanwha Chemical 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 Hanwha Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of CKH Food and Hanwha Chemical.
Diversification Opportunities for CKH Food and Hanwha Chemical
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CKH and Hanwha is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding CKH Food Health and Hanwha Chemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha Chemical Corp 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 Hanwha Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha Chemical Corp has no effect on the direction of CKH Food i.e., CKH Food and Hanwha Chemical go up and down completely randomly.
Pair Corralation between CKH Food and Hanwha Chemical
Assuming the 90 days trading horizon CKH Food Health is expected to under-perform the Hanwha Chemical. But the stock apears to be less risky and, when comparing its historical volatility, CKH Food Health is 1.08 times less risky than Hanwha Chemical. The stock trades about -0.06 of its potential returns per unit of risk. The Hanwha Chemical Corp is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 5,082,078 in Hanwha Chemical Corp on October 29, 2024 and sell it today you would lose (3,072,078) from holding Hanwha Chemical Corp or give up 60.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
CKH Food Health vs. Hanwha Chemical Corp
Performance |
| Timeline |
| CKH Food Health |
| Hanwha Chemical Corp |
CKH Food and Hanwha Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CKH Food and Hanwha Chemical
The main advantage of trading using opposite CKH Food and Hanwha Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CKH Food position performs unexpectedly, Hanwha Chemical 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 Hanwha Chemical will offset losses from the drop in Hanwha Chemical's long position.| CKH Food vs. Busan Industrial Co | CKH Food vs. Busan Ind | CKH Food vs. RPBio Inc | CKH Food vs. Finebesteel |
| Hanwha Chemical vs. Hotel Shilla Co | Hanwha Chemical vs. Chorokbaem Healthcare Co | Hanwha Chemical vs. Ssangyong Information Communication | Hanwha Chemical vs. Samsung Publishing 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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