Correlation Between KMH Hitech and Ecoplastic
Can any of the company-specific risk be diversified away by investing in both KMH Hitech and Ecoplastic 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 Ecoplastic 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 Ecoplastic, you can compare the effects of market volatilities on KMH Hitech and Ecoplastic 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 Ecoplastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of KMH Hitech and Ecoplastic.
Diversification Opportunities for KMH Hitech and Ecoplastic
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between KMH and Ecoplastic is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding KMH Hitech Co and Ecoplastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecoplastic 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 Ecoplastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecoplastic has no effect on the direction of KMH Hitech i.e., KMH Hitech and Ecoplastic go up and down completely randomly.
Pair Corralation between KMH Hitech and Ecoplastic
Assuming the 90 days trading horizon KMH Hitech Co is expected to generate 1.11 times more return on investment than Ecoplastic. However, KMH Hitech is 1.11 times more volatile than Ecoplastic. It trades about -0.12 of its potential returns per unit of risk. Ecoplastic is currently generating about -0.23 per unit of risk. If you would invest 96,400 in KMH Hitech Co on August 29, 2024 and sell it today you would lose (5,600) from holding KMH Hitech Co or give up 5.81% 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. Ecoplastic
Performance |
| Timeline |
| KMH Hitech |
| Ecoplastic |
KMH Hitech and Ecoplastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KMH Hitech and Ecoplastic
The main advantage of trading using opposite KMH Hitech and Ecoplastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KMH Hitech position performs unexpectedly, Ecoplastic 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 Ecoplastic will offset losses from the drop in Ecoplastic's long position.| KMH Hitech vs. Daou Data Corp | KMH Hitech vs. Busan Industrial Co | KMH Hitech vs. Busan Ind | KMH Hitech vs. Shinhan WTI Futures |
| Ecoplastic vs. KMH Hitech Co | Ecoplastic vs. GemVaxKAEL CoLtd | Ecoplastic vs. Busan Industrial Co | Ecoplastic vs. Busan Ind |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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