Correlation Between CKH Food and Digital Power
Can any of the company-specific risk be diversified away by investing in both CKH Food and Digital Power 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 Digital Power 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 Digital Power Communications, you can compare the effects of market volatilities on CKH Food and Digital Power 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 Digital Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of CKH Food and Digital Power.
Diversification Opportunities for CKH Food and Digital Power
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CKH and Digital is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding CKH Food Health and Digital Power Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Power Commun 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 Digital Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Power Commun has no effect on the direction of CKH Food i.e., CKH Food and Digital Power go up and down completely randomly.
Pair Corralation between CKH Food and Digital Power
Assuming the 90 days trading horizon CKH Food Health is expected to under-perform the Digital Power. In addition to that, CKH Food is 1.38 times more volatile than Digital Power Communications. It trades about -0.06 of its total potential returns per unit of risk. Digital Power Communications is currently generating about 0.04 per unit of volatility. If you would invest 551,479 in Digital Power Communications on August 28, 2024 and sell it today you would earn a total of 231,521 from holding Digital Power Communications or generate 41.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CKH Food Health vs. Digital Power Communications
Performance |
| Timeline |
| CKH Food Health |
| Digital Power Commun |
CKH Food and Digital Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CKH Food and Digital Power
The main advantage of trading using opposite CKH Food and Digital Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CKH Food position performs unexpectedly, Digital Power 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 Digital Power will offset losses from the drop in Digital Power's long position.| CKH Food vs. AptaBio Therapeutics | CKH Food vs. Daewoo SBI SPAC | CKH Food vs. Dream Security co | CKH Food vs. Microfriend |
| Digital Power vs. BIT Computer Co | Digital Power vs. Korea Computer | Digital Power vs. Hyosung Advanced Materials | Digital Power vs. National Plastic 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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