Correlation Between Tae Kyung and KMH Hitech
Can any of the company-specific risk be diversified away by investing in both Tae Kyung 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 Tae Kyung and KMH Hitech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tae Kyung Chemical and KMH Hitech Co, you can compare the effects of market volatilities on Tae Kyung 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 Tae Kyung with a short position of KMH Hitech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tae Kyung and KMH Hitech.
Diversification Opportunities for Tae Kyung and KMH Hitech
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tae and KMH is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Tae Kyung 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 Tae Kyung 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 Tae Kyung 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 Tae Kyung i.e., Tae Kyung and KMH Hitech go up and down completely randomly.
Pair Corralation between Tae Kyung and KMH Hitech
Assuming the 90 days trading horizon Tae Kyung Chemical is expected to generate 0.54 times more return on investment than KMH Hitech. However, Tae Kyung Chemical is 1.87 times less risky than KMH Hitech. It trades about -0.01 of its potential returns per unit of risk. KMH Hitech Co is currently generating about -0.08 per unit of risk. If you would invest 1,070,000 in Tae Kyung Chemical on September 13, 2024 and sell it today you would lose (6,000) from holding Tae Kyung Chemical or give up 0.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tae Kyung Chemical vs. KMH Hitech Co
Performance |
| Timeline |
| Tae Kyung Chemical |
| KMH Hitech |
Tae Kyung and KMH Hitech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tae Kyung and KMH Hitech
The main advantage of trading using opposite Tae Kyung and KMH Hitech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tae Kyung 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.| Tae Kyung vs. Samsung Electronics Co | Tae Kyung vs. Samsung Electronics Co | Tae Kyung vs. SK Hynix | Tae Kyung vs. POSCO Holdings |
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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 Stocks Directory module to find actively traded stocks across global markets.
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