Correlation Between CKH Food and LEADCORP
Can any of the company-specific risk be diversified away by investing in both CKH Food and LEADCORP 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 LEADCORP 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 The LEADCORP, you can compare the effects of market volatilities on CKH Food and LEADCORP 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 LEADCORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of CKH Food and LEADCORP.
Diversification Opportunities for CKH Food and LEADCORP
Very poor diversification
The 3 months correlation between CKH and LEADCORP is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding CKH Food Health and The LEADCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEADCORP 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 LEADCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEADCORP has no effect on the direction of CKH Food i.e., CKH Food and LEADCORP go up and down completely randomly.
Pair Corralation between CKH Food and LEADCORP
Assuming the 90 days trading horizon CKH Food Health is expected to under-perform the LEADCORP. In addition to that, CKH Food is 1.81 times more volatile than The LEADCORP. It trades about -0.18 of its total potential returns per unit of risk. The LEADCORP is currently generating about -0.1 per unit of volatility. If you would invest 417,000 in The LEADCORP on September 13, 2024 and sell it today you would lose (14,500) from holding The LEADCORP or give up 3.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
CKH Food Health vs. The LEADCORP
Performance |
| Timeline |
| CKH Food Health |
| LEADCORP |
CKH Food and LEADCORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CKH Food and LEADCORP
The main advantage of trading using opposite CKH Food and LEADCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CKH Food position performs unexpectedly, LEADCORP 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 LEADCORP will offset losses from the drop in LEADCORP'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 |
| LEADCORP vs. KB Financial Group | LEADCORP vs. Shinhan Financial Group | LEADCORP vs. Hana Financial | LEADCORP vs. Woori Financial Group |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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