Correlation Between Daou Data and Kmw
Can any of the company-specific risk be diversified away by investing in both Daou Data and Kmw 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 Daou Data and Kmw into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daou Data Corp and Kmw Inc, you can compare the effects of market volatilities on Daou Data and Kmw 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 Daou Data with a short position of Kmw. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daou Data and Kmw.
Diversification Opportunities for Daou Data and Kmw
Pay attention - limited upside
The 3 months correlation between Daou and Kmw is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Daou Data Corp and Kmw Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kmw Inc and Daou Data 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 Daou Data Corp are associated (or correlated) with Kmw. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kmw Inc has no effect on the direction of Daou Data i.e., Daou Data and Kmw go up and down completely randomly.
Pair Corralation between Daou Data and Kmw
Assuming the 90 days trading horizon Daou Data Corp is expected to under-perform the Kmw. But the stock apears to be less risky and, when comparing its historical volatility, Daou Data Corp is 1.26 times less risky than Kmw. The stock trades about -0.09 of its potential returns per unit of risk. The Kmw Inc is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 2,810,000 in Kmw Inc on September 1, 2024 and sell it today you would lose (1,965,000) from holding Kmw Inc or give up 69.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daou Data Corp vs. Kmw Inc
Performance |
| Timeline |
| Daou Data Corp |
| Kmw Inc |
Daou Data and Kmw Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daou Data and Kmw
The main advantage of trading using opposite Daou Data and Kmw positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daou Data position performs unexpectedly, Kmw 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 Kmw will offset losses from the drop in Kmw's long position.| Daou Data vs. Dongjin Semichem Co | Daou Data vs. AhnLab Inc | Daou Data vs. Posco ICT | Daou Data vs. CJ ENM |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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