Correlation Between CKH Food and LG Household
Can any of the company-specific risk be diversified away by investing in both CKH Food and LG Household 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 LG Household 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 LG Household Healthcare, you can compare the effects of market volatilities on CKH Food and LG Household 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 LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of CKH Food and LG Household.
Diversification Opportunities for CKH Food and LG Household
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CKH and 051905 is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding CKH Food Health and LG Household Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Household Healthcare 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 LG Household. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Household Healthcare has no effect on the direction of CKH Food i.e., CKH Food and LG Household go up and down completely randomly.
Pair Corralation between CKH Food and LG Household
Assuming the 90 days trading horizon CKH Food Health is expected to under-perform the LG Household. In addition to that, CKH Food is 1.54 times more volatile than LG Household Healthcare. It trades about -0.05 of its total potential returns per unit of risk. LG Household Healthcare is currently generating about -0.02 per unit of volatility. If you would invest 18,200,000 in LG Household Healthcare on August 28, 2024 and sell it today you would lose (3,610,000) from holding LG Household Healthcare or give up 19.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CKH Food Health vs. LG Household Healthcare
Performance |
| Timeline |
| CKH Food Health |
| LG Household Healthcare |
CKH Food and LG Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CKH Food and LG Household
The main advantage of trading using opposite CKH Food and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CKH Food position performs unexpectedly, LG Household 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 LG Household will offset losses from the drop in LG Household's long position.| CKH Food vs. AptaBio Therapeutics | CKH Food vs. Daewoo SBI SPAC | CKH Food vs. Dream Security co | CKH Food vs. Microfriend |
| LG Household vs. Seoyon Topmetal Co | LG Household vs. Kukil Metal Co | LG Household vs. Sangsin Energy Display | LG Household vs. Digital Power Communications |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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