Correlation Between CKH Food and Sam Yang

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

Diversification Opportunities for CKH Food and Sam Yang

-0.34

Correlation Coefficient

CKH Food  Sam Yang

Very good diversification

The 3 months correlation between CKH and Sam is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding CKH Food Health and Sam Yang Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sam Yang Foods 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 Sam Yang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sam Yang Foods has no effect on the direction of CKH Food i.e., CKH Food and Sam Yang go up and down completely randomly.

Pair Corralation between CKH Food and Sam Yang

Assuming the 90 days trading horizon CKH Food Health is expected to under-perform the Sam Yang. But the stock apears to be less risky and, when comparing its historical volatility, CKH Food Health is 1.25 times less risky than Sam Yang. The stock trades about -0.05 of its potential returns per unit of risk. The Sam Yang Foods is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  21,724,900  in Sam Yang Foods on September 13, 2024 and sell it today you would earn a total of  46,575,100  from holding Sam Yang Foods or generate 214.39% return on investment over 90 days.

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

CKH Food Health  vs.  Sam Yang Foods

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

Sam Yang Foods

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sam Yang Foods are ranked lower than 12 (%) 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.

Pair Trading with CKH Food and Sam Yang

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

The idea behind CKH Food Health and Sam Yang Foods 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 Valuation module to check real value of public entities based on technical and fundamental data.