Correlation Between SH Energy and KMH Hitech
Can any of the company-specific risk be diversified away by investing in both SH Energy and KMH Hitech 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 SH Energy and KMH Hitech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SH Energy Chemical and KMH Hitech Co, you can compare the effects of market volatilities on SH Energy and KMH Hitech 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 SH Energy with a short position of KMH Hitech. Check out your portfolio center. Please also check ongoing floating volatility patterns of SH Energy and KMH Hitech.
Diversification Opportunities for SH Energy and KMH Hitech
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between 002360 and KMH is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding SH Energy Chemical and KMH Hitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KMH Hitech and SH Energy 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 SH Energy Chemical are associated (or correlated) with KMH Hitech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KMH Hitech has no effect on the direction of SH Energy i.e., SH Energy and KMH Hitech go up and down completely randomly.
Pair Corralation between SH Energy and KMH Hitech
Assuming the 90 days trading horizon SH Energy Chemical is expected to under-perform the KMH Hitech. In addition to that, SH Energy is 1.62 times more volatile than KMH Hitech Co. It trades about -0.06 of its total potential returns per unit of risk. KMH Hitech Co is currently generating about -0.08 per unit of volatility. If you would invest 88,000 in KMH Hitech Co on September 13, 2024 and sell it today you would lose (4,500) from holding KMH Hitech Co or give up 5.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SH Energy Chemical vs. KMH Hitech Co
Performance |
| Timeline |
| SH Energy Chemical |
| KMH Hitech |
SH Energy and KMH Hitech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SH Energy and KMH Hitech
The main advantage of trading using opposite SH Energy and KMH Hitech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SH Energy position performs unexpectedly, KMH Hitech 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 KMH Hitech will offset losses from the drop in KMH Hitech's long position.| SH Energy vs. Dongwon Metal Co | SH Energy vs. Daiyang Metal Co | SH Energy vs. Kukdong Oil Chemicals | SH Energy vs. DONGKUK TED METAL |
| KMH Hitech vs. Cube Entertainment | KMH Hitech vs. Dreamus Company | KMH Hitech vs. LG Energy Solution | KMH Hitech vs. Dongwon System |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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