Correlation Between KMH Hitech and Phoenix Materials
Can any of the company-specific risk be diversified away by investing in both KMH Hitech and Phoenix Materials 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 Phoenix Materials 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 Phoenix Materials Co, you can compare the effects of market volatilities on KMH Hitech and Phoenix Materials 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 Phoenix Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of KMH Hitech and Phoenix Materials.
Diversification Opportunities for KMH Hitech and Phoenix Materials
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KMH and Phoenix is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding KMH Hitech Co and Phoenix Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Materials 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 Phoenix Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix Materials has no effect on the direction of KMH Hitech i.e., KMH Hitech and Phoenix Materials go up and down completely randomly.
Pair Corralation between KMH Hitech and Phoenix Materials
Assuming the 90 days trading horizon KMH Hitech is expected to generate 1.27 times less return on investment than Phoenix Materials. But when comparing it to its historical volatility, KMH Hitech Co is 2.89 times less risky than Phoenix Materials. It trades about 0.15 of its potential returns per unit of risk. Phoenix Materials Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 69,500 in Phoenix Materials Co on October 30, 2024 and sell it today you would earn a total of 6,500 from holding Phoenix Materials Co or generate 9.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KMH Hitech Co vs. Phoenix Materials Co
Performance |
| Timeline |
| KMH Hitech |
| Phoenix Materials |
KMH Hitech and Phoenix Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KMH Hitech and Phoenix Materials
The main advantage of trading using opposite KMH Hitech and Phoenix Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KMH Hitech position performs unexpectedly, Phoenix Materials 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 Phoenix Materials will offset losses from the drop in Phoenix Materials' 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 |
| Phoenix Materials vs. Hyunwoo Industrial Co | Phoenix Materials vs. KT Submarine Telecom | Phoenix Materials vs. Nice Information Telecommunication | Phoenix Materials vs. Hanjin Transportation 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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