Correlation Between CKH Food and Digital Imaging
Can any of the company-specific risk be diversified away by investing in both CKH Food and Digital Imaging 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 Imaging 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 Imaging Technology, you can compare the effects of market volatilities on CKH Food and Digital Imaging 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 Imaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of CKH Food and Digital Imaging.
Diversification Opportunities for CKH Food and Digital Imaging
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CKH and Digital is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding CKH Food Health and Digital Imaging Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Imaging Tech 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 Imaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Imaging Tech has no effect on the direction of CKH Food i.e., CKH Food and Digital Imaging go up and down completely randomly.
Pair Corralation between CKH Food and Digital Imaging
Assuming the 90 days trading horizon CKH Food Health is expected to under-perform the Digital Imaging. But the stock apears to be less risky and, when comparing its historical volatility, CKH Food Health is 1.51 times less risky than Digital Imaging. The stock trades about -0.06 of its potential returns per unit of risk. The Digital Imaging Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 542,668 in Digital Imaging Technology on September 25, 2024 and sell it today you would earn a total of 764,332 from holding Digital Imaging Technology or generate 140.85% 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 Imaging Technology
Performance |
| Timeline |
| CKH Food Health |
| Digital Imaging Tech |
CKH Food and Digital Imaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CKH Food and Digital Imaging
The main advantage of trading using opposite CKH Food and Digital Imaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CKH Food position performs unexpectedly, Digital Imaging 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 Imaging will offset losses from the drop in Digital Imaging's long position.| CKH Food vs. Cots Technology Co | CKH Food vs. Inzi Display CoLtd | CKH Food vs. Adaptive Plasma Technology | CKH Food vs. Puloon Technology |
| Digital Imaging vs. MetaLabs Co | Digital Imaging vs. Taegu Broadcasting | Digital Imaging vs. Korea Computer | Digital Imaging 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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