Correlation Between CKH Food and Lotte Data
Can any of the company-specific risk be diversified away by investing in both CKH Food and Lotte Data 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 Lotte Data 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 Lotte Data Communication, you can compare the effects of market volatilities on CKH Food and Lotte Data 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 Lotte Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of CKH Food and Lotte Data.
Diversification Opportunities for CKH Food and Lotte Data
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CKH and Lotte is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding CKH Food Health and Lotte Data Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Data Communication 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 Lotte Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Data Communication has no effect on the direction of CKH Food i.e., CKH Food and Lotte Data go up and down completely randomly.
Pair Corralation between CKH Food and Lotte Data
Assuming the 90 days trading horizon CKH Food Health is expected to under-perform the Lotte Data. In addition to that, CKH Food is 1.07 times more volatile than Lotte Data Communication. It trades about -0.21 of its total potential returns per unit of risk. Lotte Data Communication is currently generating about -0.19 per unit of volatility. If you would invest 2,060,000 in Lotte Data Communication on November 7, 2024 and sell it today you would lose (106,000) from holding Lotte Data Communication or give up 5.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CKH Food Health vs. Lotte Data Communication
Performance |
| Timeline |
| CKH Food Health |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Lotte Data Communication |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
CKH Food and Lotte Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CKH Food and Lotte Data
The main advantage of trading using opposite CKH Food and Lotte Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CKH Food position performs unexpectedly, Lotte Data 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 Lotte Data will offset losses from the drop in Lotte Data's long position.| CKH Food vs. Solution Advanced Technology | CKH Food vs. Shinhan Inverse WTI | CKH Food vs. ISU Chemical Co |
| Lotte Data vs. SAMG Entertainment Co | Lotte Data vs. Shinhan Inverse Copper | Lotte Data vs. SEOWONINTECHCoLtd | Lotte Data vs. A Tech Solution 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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