Correlation Between KMH Hitech and Orbitech
Can any of the company-specific risk be diversified away by investing in both KMH Hitech and Orbitech 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 Orbitech 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 Orbitech Co, you can compare the effects of market volatilities on KMH Hitech and Orbitech 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 Orbitech. Check out your portfolio center. Please also check ongoing floating volatility patterns of KMH Hitech and Orbitech.
Diversification Opportunities for KMH Hitech and Orbitech
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KMH and Orbitech is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding KMH Hitech Co and Orbitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbitech 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 Orbitech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orbitech has no effect on the direction of KMH Hitech i.e., KMH Hitech and Orbitech go up and down completely randomly.
Pair Corralation between KMH Hitech and Orbitech
Assuming the 90 days trading horizon KMH Hitech Co is expected to generate 0.69 times more return on investment than Orbitech. However, KMH Hitech Co is 1.44 times less risky than Orbitech. It trades about -0.02 of its potential returns per unit of risk. Orbitech Co is currently generating about -0.04 per unit of risk. If you would invest 135,700 in KMH Hitech Co on October 30, 2024 and sell it today you would lose (35,600) from holding KMH Hitech Co or give up 26.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KMH Hitech Co vs. Orbitech Co
Performance |
| Timeline |
| KMH Hitech |
| Orbitech |
KMH Hitech and Orbitech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KMH Hitech and Orbitech
The main advantage of trading using opposite KMH Hitech and Orbitech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KMH Hitech position performs unexpectedly, Orbitech 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 Orbitech will offset losses from the drop in Orbitech'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 |
| Orbitech vs. Lotte Rental Co | Orbitech vs. SK Chemicals Co | Orbitech vs. Daiyang Metal Co | Orbitech vs. Hannong Chemicals |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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