Correlation Between Polaris Office and KMH Hitech
Can any of the company-specific risk be diversified away by investing in both Polaris Office 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 Polaris Office and KMH Hitech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polaris Office Corp and KMH Hitech Co, you can compare the effects of market volatilities on Polaris Office 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 Polaris Office with a short position of KMH Hitech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polaris Office and KMH Hitech.
Diversification Opportunities for Polaris Office and KMH Hitech
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Polaris and KMH is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Polaris Office Corp and KMH Hitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KMH Hitech and Polaris Office 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 Polaris Office Corp 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 Polaris Office i.e., Polaris Office and KMH Hitech go up and down completely randomly.
Pair Corralation between Polaris Office and KMH Hitech
Assuming the 90 days trading horizon Polaris Office Corp is expected to under-perform the KMH Hitech. In addition to that, Polaris Office is 1.73 times more volatile than KMH Hitech Co. It trades about -0.04 of its total potential returns per unit of risk. KMH Hitech Co is currently generating about 0.3 per unit of volatility. If you would invest 89,800 in KMH Hitech Co on November 3, 2024 and sell it today you would earn a total of 8,200 from holding KMH Hitech Co or generate 9.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polaris Office Corp vs. KMH Hitech Co
Performance |
| Timeline |
| Polaris Office Corp |
| KMH Hitech |
Polaris Office and KMH Hitech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polaris Office and KMH Hitech
The main advantage of trading using opposite Polaris Office and KMH Hitech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polaris Office 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.| Polaris Office vs. Hanjin Transportation Co | Polaris Office vs. Samyoung Electronics Co | Polaris Office vs. EV Advanced Material | Polaris Office vs. Ssangyong Materials Corp |
| KMH Hitech vs. Samsung Electronics Co | KMH Hitech vs. Samsung Electronics Co | KMH Hitech vs. Hyundai Motor Co | KMH Hitech vs. Hyundai Motor |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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