Correlation Between Kia Corp and HMM
Can any of the company-specific risk be diversified away by investing in both Kia Corp and HMM 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 Kia Corp and HMM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kia Corp and HMM Co, you can compare the effects of market volatilities on Kia Corp and HMM 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 Kia Corp with a short position of HMM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kia Corp and HMM.
Diversification Opportunities for Kia Corp and HMM
Weak diversification
The 3 months correlation between Kia and HMM is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Kia Corp and HMM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMM Co and Kia Corp 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 Kia Corp are associated (or correlated) with HMM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMM Co has no effect on the direction of Kia Corp i.e., Kia Corp and HMM go up and down completely randomly.
Pair Corralation between Kia Corp and HMM
Assuming the 90 days trading horizon Kia Corp is expected to generate 0.5 times more return on investment than HMM. However, Kia Corp is 2.01 times less risky than HMM. It trades about 0.07 of its potential returns per unit of risk. HMM Co is currently generating about -0.03 per unit of risk. If you would invest 10,050,000 in Kia Corp on November 7, 2024 and sell it today you would earn a total of 150,000 from holding Kia Corp or generate 1.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 89.47% |
| Values | Daily Returns |
Kia Corp vs. HMM Co
Performance |
| Timeline |
| Kia Corp |
| HMM Co |
Kia Corp and HMM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kia Corp and HMM
The main advantage of trading using opposite Kia Corp and HMM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kia Corp position performs unexpectedly, HMM 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 HMM will offset losses from the drop in HMM's long position.| Kia Corp vs. Samsung Electronics Co | Kia Corp vs. Samsung Electronics Co | Kia Corp vs. Hyundai Motor Co | Kia Corp vs. Hyundai Motor |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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