Correlation Between KMH Hitech and Kukdo Chemical
Can any of the company-specific risk be diversified away by investing in both KMH Hitech and Kukdo Chemical 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 KMH Hitech and Kukdo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KMH Hitech Co and Kukdo Chemical Co, you can compare the effects of market volatilities on KMH Hitech and Kukdo Chemical 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 KMH Hitech with a short position of Kukdo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of KMH Hitech and Kukdo Chemical.
Diversification Opportunities for KMH Hitech and Kukdo Chemical
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KMH and Kukdo is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding KMH Hitech Co and Kukdo Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukdo Chemical and KMH Hitech 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 KMH Hitech Co are associated (or correlated) with Kukdo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kukdo Chemical has no effect on the direction of KMH Hitech i.e., KMH Hitech and Kukdo Chemical go up and down completely randomly.
Pair Corralation between KMH Hitech and Kukdo Chemical
Assuming the 90 days trading horizon KMH Hitech Co is expected to generate 1.05 times more return on investment than Kukdo Chemical. However, KMH Hitech is 1.05 times more volatile than Kukdo Chemical Co. It trades about -0.02 of its potential returns per unit of risk. Kukdo Chemical Co is currently generating about -0.02 per unit of risk. If you would invest 135,000 in KMH Hitech Co on November 2, 2024 and sell it today you would lose (34,900) from holding KMH Hitech Co or give up 25.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KMH Hitech Co vs. Kukdo Chemical Co
Performance |
| Timeline |
| KMH Hitech |
| Kukdo Chemical |
KMH Hitech and Kukdo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KMH Hitech and Kukdo Chemical
The main advantage of trading using opposite KMH Hitech and Kukdo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KMH Hitech position performs unexpectedly, Kukdo Chemical 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 Kukdo Chemical will offset losses from the drop in Kukdo Chemical's long position.| KMH Hitech vs. Union Materials Corp | KMH Hitech vs. Grand Korea Leisure | KMH Hitech vs. Lotte Rental Co | KMH Hitech vs. Alton Sports CoLtd |
| Kukdo Chemical vs. PJ Electronics Co | Kukdo Chemical vs. T3 Entertainment Co | Kukdo Chemical vs. Cube Entertainment | Kukdo Chemical vs. DAEDUCK ELECTRONICS CoLtd |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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