Correlation Between Sam Yang and CKH Food

Can any of the company-specific risk be diversified away by investing in both Sam Yang and CKH Food 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 Sam Yang and CKH Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sam Yang Foods and CKH Food Health, you can compare the effects of market volatilities on Sam Yang and CKH Food 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 Sam Yang with a short position of CKH Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sam Yang and CKH Food.

Diversification Opportunities for Sam Yang and CKH Food

-0.86

Correlation Coefficient

Sam Yang  CKH Food

Pay attention - limited upside

The 3 months correlation between Sam and CKH is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Sam Yang Foods and CKH Food Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CKH Food Health and Sam Yang 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 Sam Yang Foods are associated (or correlated) with CKH Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CKH Food Health has no effect on the direction of Sam Yang i.e., Sam Yang and CKH Food go up and down completely randomly.

Pair Corralation between Sam Yang and CKH Food

Assuming the 90 days trading horizon Sam Yang Foods is expected to generate 1.63 times more return on investment than CKH Food. However, Sam Yang is 1.63 times more volatile than CKH Food Health. It trades about 0.07 of its potential returns per unit of risk. CKH Food Health is currently generating about -0.19 per unit of risk. If you would invest  76,342,800  in Sam Yang Foods on December 30, 2024 and sell it today you would earn a total of  8,057,200  from holding Sam Yang Foods or generate 10.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Sam Yang Foods  vs.  CKH Food Health

Sam Yang Foods

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sam Yang Foods are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sam Yang sustained solid returns over the last few months and may actually be approaching a breakup point.

CKH Food Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days CKH Food Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Sam Yang and CKH Food

The main advantage of trading using opposite Sam Yang and CKH Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sam Yang position performs unexpectedly, CKH Food 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 CKH Food will offset losses from the drop in CKH Food's long position.

The idea behind Sam Yang Foods and CKH Food Health pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.