Correlation Between KMH Hitech and ABOV Semiconductor
Can any of the company-specific risk be diversified away by investing in both KMH Hitech and ABOV Semiconductor 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 ABOV Semiconductor 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 ABOV Semiconductor Co, you can compare the effects of market volatilities on KMH Hitech and ABOV Semiconductor 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 ABOV Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of KMH Hitech and ABOV Semiconductor.
Diversification Opportunities for KMH Hitech and ABOV Semiconductor
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between KMH and ABOV is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding KMH Hitech Co and ABOV Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABOV Semiconductor 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 ABOV Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABOV Semiconductor has no effect on the direction of KMH Hitech i.e., KMH Hitech and ABOV Semiconductor go up and down completely randomly.
Pair Corralation between KMH Hitech and ABOV Semiconductor
Assuming the 90 days trading horizon KMH Hitech is expected to generate 1.02 times less return on investment than ABOV Semiconductor. But when comparing it to its historical volatility, KMH Hitech Co is 2.0 times less risky than ABOV Semiconductor. It trades about 0.51 of its potential returns per unit of risk. ABOV Semiconductor Co is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 750,000 in ABOV Semiconductor Co on October 12, 2024 and sell it today you would earn a total of 107,000 from holding ABOV Semiconductor Co or generate 14.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KMH Hitech Co vs. ABOV Semiconductor Co
Performance |
| Timeline |
| KMH Hitech |
| ABOV Semiconductor |
KMH Hitech and ABOV Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KMH Hitech and ABOV Semiconductor
The main advantage of trading using opposite KMH Hitech and ABOV Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KMH Hitech position performs unexpectedly, ABOV Semiconductor 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 ABOV Semiconductor will offset losses from the drop in ABOV Semiconductor's long position.| KMH Hitech vs. Hyundai Home Shopping | KMH Hitech vs. Samyang Foods Co | KMH Hitech vs. Innowireless Co | KMH Hitech vs. Mobileleader CoLtd |
| ABOV Semiconductor vs. KMH Hitech Co | ABOV Semiconductor vs. GemVaxKAEL CoLtd | ABOV Semiconductor vs. Bosung Power Technology | ABOV Semiconductor vs. Busan Industrial 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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