Correlation Between KMH Hitech and Daou Data
Can any of the company-specific risk be diversified away by investing in both KMH Hitech and Daou Data 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 Daou Data 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 Daou Data Corp, you can compare the effects of market volatilities on KMH Hitech and Daou Data 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 Daou Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of KMH Hitech and Daou Data.
Diversification Opportunities for KMH Hitech and Daou Data
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KMH and Daou is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding KMH Hitech Co and Daou Data Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daou Data Corp 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 Daou Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daou Data Corp has no effect on the direction of KMH Hitech i.e., KMH Hitech and Daou Data go up and down completely randomly.
Pair Corralation between KMH Hitech and Daou Data
Assuming the 90 days trading horizon KMH Hitech Co is expected to under-perform the Daou Data. In addition to that, KMH Hitech is 1.94 times more volatile than Daou Data Corp. It trades about -0.11 of its total potential returns per unit of risk. Daou Data Corp is currently generating about -0.05 per unit of volatility. If you would invest 1,095,000 in Daou Data Corp on September 1, 2024 and sell it today you would lose (14,000) from holding Daou Data Corp or give up 1.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KMH Hitech Co vs. Daou Data Corp
Performance |
| Timeline |
| KMH Hitech |
| Daou Data Corp |
KMH Hitech and Daou Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KMH Hitech and Daou Data
The main advantage of trading using opposite KMH Hitech and Daou Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KMH Hitech position performs unexpectedly, Daou Data 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 Daou Data will offset losses from the drop in Daou Data's long position.| KMH Hitech vs. Dongsin Engineering Construction | KMH Hitech vs. Doosan Fuel Cell | KMH Hitech vs. Daishin Balance 1 | KMH Hitech vs. Total Soft Bank |
| Daou Data vs. Dongjin Semichem Co | Daou Data vs. AhnLab Inc | Daou Data vs. Posco ICT | Daou Data vs. CJ ENM |
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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