Correlation Between CKH Food and SCI Information
Can any of the company-specific risk be diversified away by investing in both CKH Food and SCI Information 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 SCI Information 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 SCI Information Service, you can compare the effects of market volatilities on CKH Food and SCI Information 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 SCI Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of CKH Food and SCI Information.
Diversification Opportunities for CKH Food and SCI Information
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CKH and SCI is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding CKH Food Health and SCI Information Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCI Information Service 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 SCI Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCI Information Service has no effect on the direction of CKH Food i.e., CKH Food and SCI Information go up and down completely randomly.
Pair Corralation between CKH Food and SCI Information
Assuming the 90 days trading horizon CKH Food Health is expected to under-perform the SCI Information. But the stock apears to be less risky and, when comparing its historical volatility, CKH Food Health is 1.05 times less risky than SCI Information. The stock trades about -0.16 of its potential returns per unit of risk. The SCI Information Service is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 237,500 in SCI Information Service on November 9, 2024 and sell it today you would lose (10,500) from holding SCI Information Service or give up 4.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CKH Food Health vs. SCI Information Service
Performance |
| Timeline |
| CKH Food Health |
| SCI Information Service |
CKH Food and SCI Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CKH Food and SCI Information
The main advantage of trading using opposite CKH Food and SCI Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CKH Food position performs unexpectedly, SCI Information 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 SCI Information will offset losses from the drop in SCI Information's long position.| CKH Food vs. Ssangyong Information Communication | CKH Food vs. Nice Information Telecommunication | CKH Food vs. NewFlex Technology Co | CKH Food vs. BIT Computer Co |
| SCI Information vs. Busan Industrial Co | SCI Information vs. Busan Ind | SCI Information vs. Mirae Asset Daewoo | SCI Information vs. Shinhan WTI Futures |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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