Correlation Between KMH Hitech and Korean Drug
Can any of the company-specific risk be diversified away by investing in both KMH Hitech and Korean Drug 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 Korean Drug 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 Korean Drug Co, you can compare the effects of market volatilities on KMH Hitech and Korean Drug 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 Korean Drug. Check out your portfolio center. Please also check ongoing floating volatility patterns of KMH Hitech and Korean Drug.
Diversification Opportunities for KMH Hitech and Korean Drug
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between KMH and Korean is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding KMH Hitech Co and Korean Drug Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Drug 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 Korean Drug. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Drug has no effect on the direction of KMH Hitech i.e., KMH Hitech and Korean Drug go up and down completely randomly.
Pair Corralation between KMH Hitech and Korean Drug
Assuming the 90 days trading horizon KMH Hitech Co is expected to generate 1.15 times more return on investment than Korean Drug. However, KMH Hitech is 1.15 times more volatile than Korean Drug Co. It trades about -0.04 of its potential returns per unit of risk. Korean Drug Co is currently generating about -0.08 per unit of risk. If you would invest 114,600 in KMH Hitech Co on September 4, 2024 and sell it today you would lose (27,200) from holding KMH Hitech Co or give up 23.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KMH Hitech Co vs. Korean Drug Co
Performance |
| Timeline |
| KMH Hitech |
| Korean Drug |
KMH Hitech and Korean Drug Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KMH Hitech and Korean Drug
The main advantage of trading using opposite KMH Hitech and Korean Drug positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KMH Hitech position performs unexpectedly, Korean Drug 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 Korean Drug will offset losses from the drop in Korean Drug's long position.| KMH Hitech vs. Cheryong Industrial CoLtd | KMH Hitech vs. Kbi Metal Co | KMH Hitech vs. Hyunwoo Industrial Co | KMH Hitech vs. Samhwa Paint Industrial |
| Korean Drug vs. Orbitech Co | Korean Drug vs. HJ ShipBuilding Construction | Korean Drug vs. Lion Chemtech Co | Korean Drug vs. KMH Hitech Co |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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