Correlation Between KMH Hitech and Youngbo Chemical
Can any of the company-specific risk be diversified away by investing in both KMH Hitech and Youngbo 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 Youngbo 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 Youngbo Chemical Co, you can compare the effects of market volatilities on KMH Hitech and Youngbo 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 Youngbo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of KMH Hitech and Youngbo Chemical.
Diversification Opportunities for KMH Hitech and Youngbo Chemical
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KMH and Youngbo is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding KMH Hitech Co and Youngbo Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Youngbo 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 Youngbo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Youngbo Chemical has no effect on the direction of KMH Hitech i.e., KMH Hitech and Youngbo Chemical go up and down completely randomly.
Pair Corralation between KMH Hitech and Youngbo Chemical
Assuming the 90 days trading horizon KMH Hitech Co is expected to under-perform the Youngbo Chemical. In addition to that, KMH Hitech is 1.5 times more volatile than Youngbo Chemical Co. It trades about -0.02 of its total potential returns per unit of risk. Youngbo Chemical Co is currently generating about 0.02 per unit of volatility. If you would invest 365,635 in Youngbo Chemical Co on October 30, 2024 and sell it today you would earn a total of 27,365 from holding Youngbo Chemical Co or generate 7.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KMH Hitech Co vs. Youngbo Chemical Co
Performance |
| Timeline |
| KMH Hitech |
| Youngbo Chemical |
KMH Hitech and Youngbo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KMH Hitech and Youngbo Chemical
The main advantage of trading using opposite KMH Hitech and Youngbo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KMH Hitech position performs unexpectedly, Youngbo 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 Youngbo Chemical will offset losses from the drop in Youngbo Chemical's long position.| KMH Hitech vs. Insung Information Co | KMH Hitech vs. Daewon Chemical Co | KMH Hitech vs. Infinitt Healthcare Co | KMH Hitech vs. SH Energy Chemical |
| Youngbo Chemical vs. KB Financial Group | Youngbo Chemical vs. Shinhan Financial Group | Youngbo Chemical vs. Hana Financial | Youngbo Chemical vs. Woori Financial Group |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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