Correlation Between SungMoon Electronics and KMH Hitech
Can any of the company-specific risk be diversified away by investing in both SungMoon Electronics 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 SungMoon Electronics and KMH Hitech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SungMoon Electronics Co and KMH Hitech Co, you can compare the effects of market volatilities on SungMoon Electronics 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 SungMoon Electronics with a short position of KMH Hitech. Check out your portfolio center. Please also check ongoing floating volatility patterns of SungMoon Electronics and KMH Hitech.
Diversification Opportunities for SungMoon Electronics and KMH Hitech
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SungMoon and KMH is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding SungMoon Electronics Co and KMH Hitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KMH Hitech and SungMoon Electronics 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 SungMoon Electronics Co 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 SungMoon Electronics i.e., SungMoon Electronics and KMH Hitech go up and down completely randomly.
Pair Corralation between SungMoon Electronics and KMH Hitech
Assuming the 90 days trading horizon SungMoon Electronics Co is expected to under-perform the KMH Hitech. In addition to that, SungMoon Electronics is 1.5 times more volatile than KMH Hitech Co. It trades about -0.01 of its total potential returns per unit of risk. KMH Hitech Co is currently generating about -0.02 per unit of volatility. If you would invest 137,500 in KMH Hitech Co on October 30, 2024 and sell it today you would lose (37,400) from holding KMH Hitech Co or give up 27.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SungMoon Electronics Co vs. KMH Hitech Co
Performance |
| Timeline |
| SungMoon Electronics |
| KMH Hitech |
SungMoon Electronics and KMH Hitech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SungMoon Electronics and KMH Hitech
The main advantage of trading using opposite SungMoon Electronics and KMH Hitech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SungMoon Electronics 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.| SungMoon Electronics vs. ENF Technology Co | SungMoon Electronics vs. Shinil Industrial Co | SungMoon Electronics vs. HB Technology TD | SungMoon Electronics vs. Daejung Chemicals Metals |
| KMH Hitech vs. Insung Information Co | KMH Hitech vs. Daewon Chemical Co | KMH Hitech vs. Infinitt Healthcare Co | KMH Hitech vs. SH Energy Chemical |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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