Correlation Between KMH Hitech and Dreamus
Can any of the company-specific risk be diversified away by investing in both KMH Hitech and Dreamus 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 Dreamus 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 Dreamus Company, you can compare the effects of market volatilities on KMH Hitech and Dreamus 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 Dreamus. Check out your portfolio center. Please also check ongoing floating volatility patterns of KMH Hitech and Dreamus.
Diversification Opportunities for KMH Hitech and Dreamus
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KMH and Dreamus is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding KMH Hitech Co and Dreamus Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreamus Company 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 Dreamus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreamus Company has no effect on the direction of KMH Hitech i.e., KMH Hitech and Dreamus go up and down completely randomly.
Pair Corralation between KMH Hitech and Dreamus
Assuming the 90 days trading horizon KMH Hitech Co is expected to generate 0.63 times more return on investment than Dreamus. However, KMH Hitech Co is 1.58 times less risky than Dreamus. It trades about -0.02 of its potential returns per unit of risk. Dreamus Company is currently generating about -0.02 per unit of risk. If you would invest 136,300 in KMH Hitech Co on November 27, 2024 and sell it today you would lose (34,700) from holding KMH Hitech Co or give up 25.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KMH Hitech Co vs. Dreamus Company
Performance |
| Timeline |
| KMH Hitech |
| Dreamus Company |
KMH Hitech and Dreamus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KMH Hitech and Dreamus
The main advantage of trading using opposite KMH Hitech and Dreamus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KMH Hitech position performs unexpectedly, Dreamus 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 Dreamus will offset losses from the drop in Dreamus' long position.| KMH Hitech vs. Narae Nanotech Corp | KMH Hitech vs. Digital Multimedia Technology | KMH Hitech vs. MediaZen | KMH Hitech vs. ChipsMedia |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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