Correlation Between HLB Power and Kia Corp
Can any of the company-specific risk be diversified away by investing in both HLB Power and Kia Corp 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 HLB Power and Kia Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HLB Power Co and Kia Corp, you can compare the effects of market volatilities on HLB Power and Kia Corp 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 HLB Power with a short position of Kia Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of HLB Power and Kia Corp.
Diversification Opportunities for HLB Power and Kia Corp
Very weak diversification
The 3 months correlation between HLB and Kia is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding HLB Power Co and Kia Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kia Corp and HLB Power 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 HLB Power Co are associated (or correlated) with Kia Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kia Corp has no effect on the direction of HLB Power i.e., HLB Power and Kia Corp go up and down completely randomly.
Pair Corralation between HLB Power and Kia Corp
Assuming the 90 days trading horizon HLB Power Co is expected to under-perform the Kia Corp. In addition to that, HLB Power is 1.8 times more volatile than Kia Corp. It trades about -0.03 of its total potential returns per unit of risk. Kia Corp is currently generating about 0.06 per unit of volatility. If you would invest 5,740,633 in Kia Corp on September 12, 2024 and sell it today you would earn a total of 3,839,367 from holding Kia Corp or generate 66.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HLB Power Co vs. Kia Corp
Performance |
| Timeline |
| HLB Power |
| Kia Corp |
HLB Power and Kia Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HLB Power and Kia Corp
The main advantage of trading using opposite HLB Power and Kia Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HLB Power position performs unexpectedly, Kia Corp 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 Kia Corp will offset losses from the drop in Kia Corp's long position.| HLB Power vs. Cloud Air CoLtd | HLB Power vs. Jin Air Co | HLB Power vs. Daejung Chemicals Metals | HLB Power vs. iNtRON Biotechnology |
| Kia Corp vs. Daou Data Corp | Kia Corp vs. Solution Advanced Technology | Kia Corp vs. Busan Industrial Co | Kia Corp vs. Busan Ind |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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