Correlation Between CKH Food and Choong Ang

Can any of the company-specific risk be diversified away by investing in both CKH Food and Choong Ang 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 Choong Ang 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 Choong Ang Vaccine, you can compare the effects of market volatilities on CKH Food and Choong Ang 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 Choong Ang. Check out your portfolio center. Please also check ongoing floating volatility patterns of CKH Food and Choong Ang.

Diversification Opportunities for CKH Food and Choong Ang

0.84

Correlation Coefficient

CKH Food  Choong Ang

Very poor diversification

The 3 months correlation between CKH and Choong is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding CKH Food Health and Choong Ang Vaccine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choong Ang Vaccine 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 Choong Ang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choong Ang Vaccine has no effect on the direction of CKH Food i.e., CKH Food and Choong Ang go up and down completely randomly.

Pair Corralation between CKH Food and Choong Ang

Assuming the 90 days trading horizon CKH Food is expected to generate 1.81 times less return on investment than Choong Ang. In addition to that, CKH Food is 1.59 times more volatile than Choong Ang Vaccine. It trades about 0.11 of its total potential returns per unit of risk. Choong Ang Vaccine is currently generating about 0.31 per unit of volatility. If you would invest  900,000  in Choong Ang Vaccine on October 8, 2024 and sell it today you would earn a total of  89,000  from holding Choong Ang Vaccine or generate 9.89% return on investment over 90 days.

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

CKH Food Health  vs.  Choong Ang Vaccine

CKH Food Health

Risk-Adjusted Performance

0 of 100

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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Choong Ang Vaccine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Choong Ang Vaccine has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Choong Ang is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CKH Food and Choong Ang

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

The idea behind CKH Food Health and Choong Ang Vaccine 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.