Correlation Between CKH Food and Korea Electric
Can any of the company-specific risk be diversified away by investing in both CKH Food and Korea Electric 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 Korea Electric 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 Korea Electric Power, you can compare the effects of market volatilities on CKH Food and Korea Electric 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 Korea Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of CKH Food and Korea Electric.
Diversification Opportunities for CKH Food and Korea Electric
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CKH and Korea is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding CKH Food Health and Korea Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Electric Power 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 Korea Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Electric Power has no effect on the direction of CKH Food i.e., CKH Food and Korea Electric go up and down completely randomly.
Pair Corralation between CKH Food and Korea Electric
Assuming the 90 days trading horizon CKH Food Health is expected to under-perform the Korea Electric. In addition to that, CKH Food is 1.02 times more volatile than Korea Electric Power. It trades about -0.15 of its total potential returns per unit of risk. Korea Electric Power is currently generating about -0.07 per unit of volatility. If you would invest 2,220,000 in Korea Electric Power on September 14, 2024 and sell it today you would lose (105,000) from holding Korea Electric Power or give up 4.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CKH Food Health vs. Korea Electric Power
Performance |
| Timeline |
| CKH Food Health |
| Korea Electric Power |
CKH Food and Korea Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CKH Food and Korea Electric
The main advantage of trading using opposite CKH Food and Korea Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CKH Food position performs unexpectedly, Korea Electric 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 Korea Electric will offset losses from the drop in Korea Electric'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 |
| Korea Electric vs. Daou Data Corp | Korea Electric vs. Wonil Special Steel | Korea Electric vs. Ssangyong Information Communication | Korea Electric vs. Jeong Moon Information |
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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