Correlation Between Total Soft and KMH Hitech
Can any of the company-specific risk be diversified away by investing in both Total Soft 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 Total Soft and KMH Hitech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Total Soft Bank and KMH Hitech Co, you can compare the effects of market volatilities on Total Soft 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 Total Soft with a short position of KMH Hitech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Soft and KMH Hitech.
Diversification Opportunities for Total Soft and KMH Hitech
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Total and KMH is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Total Soft Bank and KMH Hitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KMH Hitech and Total Soft 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 Total Soft Bank 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 Total Soft i.e., Total Soft and KMH Hitech go up and down completely randomly.
Pair Corralation between Total Soft and KMH Hitech
Assuming the 90 days trading horizon Total Soft Bank is expected to generate 1.42 times more return on investment than KMH Hitech. However, Total Soft is 1.42 times more volatile than KMH Hitech Co. It trades about 0.02 of its potential returns per unit of risk. KMH Hitech Co is currently generating about -0.02 per unit of risk. If you would invest 433,000 in Total Soft Bank on September 2, 2024 and sell it today you would earn a total of 35,000 from holding Total Soft Bank or generate 8.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Total Soft Bank vs. KMH Hitech Co
Performance |
| Timeline |
| Total Soft Bank |
| KMH Hitech |
Total Soft and KMH Hitech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Total Soft and KMH Hitech
The main advantage of trading using opposite Total Soft and KMH Hitech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Total Soft 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.| Total Soft vs. Devsisters corporation | Total Soft vs. Konan Technology | Total Soft vs. Nice Information Telecommunication | Total Soft vs. InfoBank |
| KMH Hitech vs. Dongsin Engineering Construction | KMH Hitech vs. Doosan Fuel Cell | KMH Hitech vs. Daishin Balance 1 | KMH Hitech vs. Total Soft Bank |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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