Correlation Between KMH Hitech and Kumho Petro
Can any of the company-specific risk be diversified away by investing in both KMH Hitech and Kumho Petro 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 Kumho Petro 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 Kumho Petro Chemical, you can compare the effects of market volatilities on KMH Hitech and Kumho Petro 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 Kumho Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of KMH Hitech and Kumho Petro.
Diversification Opportunities for KMH Hitech and Kumho Petro
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KMH and Kumho is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding KMH Hitech Co and Kumho Petro Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kumho Petro 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 Kumho Petro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kumho Petro Chemical has no effect on the direction of KMH Hitech i.e., KMH Hitech and Kumho Petro go up and down completely randomly.
Pair Corralation between KMH Hitech and Kumho Petro
Assuming the 90 days trading horizon KMH Hitech is expected to generate 1.76 times less return on investment than Kumho Petro. But when comparing it to its historical volatility, KMH Hitech Co is 2.0 times less risky than Kumho Petro. It trades about 0.25 of its potential returns per unit of risk. Kumho Petro Chemical is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 9,330,000 in Kumho Petro Chemical on October 25, 2024 and sell it today you would earn a total of 1,300,000 from holding Kumho Petro Chemical or generate 13.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KMH Hitech Co vs. Kumho Petro Chemical
Performance |
| Timeline |
| KMH Hitech |
| Kumho Petro Chemical |
KMH Hitech and Kumho Petro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KMH Hitech and Kumho Petro
The main advantage of trading using opposite KMH Hitech and Kumho Petro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KMH Hitech position performs unexpectedly, Kumho Petro 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 Kumho Petro will offset losses from the drop in Kumho Petro's long position.| KMH Hitech vs. Samsung Electronics Co | KMH Hitech vs. Samsung Electronics Co | KMH Hitech vs. SK Hynix | KMH Hitech vs. HMM Co |
| Kumho Petro vs. Hanmi Semiconductor Co | Kumho Petro vs. PI Advanced Materials | Kumho Petro vs. Hyosung Advanced Materials | Kumho Petro vs. Asiana Airlines |
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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