Correlation Between KPX Chemical and ITM Semiconductor
Can any of the company-specific risk be diversified away by investing in both KPX Chemical and ITM Semiconductor 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 KPX Chemical and ITM Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KPX Chemical and ITM Semiconductor Co, you can compare the effects of market volatilities on KPX Chemical and ITM Semiconductor 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 KPX Chemical with a short position of ITM Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of KPX Chemical and ITM Semiconductor.
Diversification Opportunities for KPX Chemical and ITM Semiconductor
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KPX and ITM is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding KPX Chemical and ITM Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITM Semiconductor and KPX Chemical 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 KPX Chemical are associated (or correlated) with ITM Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITM Semiconductor has no effect on the direction of KPX Chemical i.e., KPX Chemical and ITM Semiconductor go up and down completely randomly.
Pair Corralation between KPX Chemical and ITM Semiconductor
Assuming the 90 days trading horizon KPX Chemical is expected to generate 0.49 times more return on investment than ITM Semiconductor. However, KPX Chemical is 2.06 times less risky than ITM Semiconductor. It trades about -0.06 of its potential returns per unit of risk. ITM Semiconductor Co is currently generating about -0.26 per unit of risk. If you would invest 4,540,000 in KPX Chemical on September 14, 2024 and sell it today you would lose (85,000) from holding KPX Chemical or give up 1.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KPX Chemical vs. ITM Semiconductor Co
Performance |
| Timeline |
| KPX Chemical |
| ITM Semiconductor |
KPX Chemical and ITM Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KPX Chemical and ITM Semiconductor
The main advantage of trading using opposite KPX Chemical and ITM Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KPX Chemical position performs unexpectedly, ITM Semiconductor 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 ITM Semiconductor will offset losses from the drop in ITM Semiconductor's long position.| KPX Chemical vs. Formetal Co | KPX Chemical vs. Songwon Industrial Co | KPX Chemical vs. Digital Power Communications | KPX Chemical vs. Dongwon Metal Co |
| ITM Semiconductor vs. SK Hynix | ITM Semiconductor vs. People Technology | ITM Semiconductor vs. Hana Materials | ITM Semiconductor vs. SIMMTECH Co |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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