Correlation Between Dongwon System and KMH Hitech
Can any of the company-specific risk be diversified away by investing in both Dongwon System 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 Dongwon System and KMH Hitech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongwon System and KMH Hitech Co, you can compare the effects of market volatilities on Dongwon System 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 Dongwon System with a short position of KMH Hitech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwon System and KMH Hitech.
Diversification Opportunities for Dongwon System and KMH Hitech
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dongwon and KMH is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Dongwon System and KMH Hitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KMH Hitech and Dongwon System 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 Dongwon System 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 Dongwon System i.e., Dongwon System and KMH Hitech go up and down completely randomly.
Pair Corralation between Dongwon System and KMH Hitech
Assuming the 90 days trading horizon Dongwon System is expected to under-perform the KMH Hitech. In addition to that, Dongwon System is 1.25 times more volatile than KMH Hitech Co. It trades about -0.12 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwon System vs. KMH Hitech Co
Performance |
| Timeline |
| Dongwon System |
| KMH Hitech |
Dongwon System and KMH Hitech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwon System and KMH Hitech
The main advantage of trading using opposite Dongwon System and KMH Hitech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwon System 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.| Dongwon System vs. ABOV Semiconductor Co | Dongwon System vs. BGF Retail Co | Dongwon System vs. Seoul Semiconductor Co | Dongwon System vs. ITM Semiconductor Co |
| 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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