Correlation Between KMH Hitech and Daejung Chemicals
Can any of the company-specific risk be diversified away by investing in both KMH Hitech and Daejung Chemicals 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 Daejung Chemicals 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 Daejung Chemicals Metals, you can compare the effects of market volatilities on KMH Hitech and Daejung Chemicals 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 Daejung Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of KMH Hitech and Daejung Chemicals.
Diversification Opportunities for KMH Hitech and Daejung Chemicals
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between KMH and Daejung is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding KMH Hitech Co and Daejung Chemicals Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejung Chemicals Metals 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 Daejung Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejung Chemicals Metals has no effect on the direction of KMH Hitech i.e., KMH Hitech and Daejung Chemicals go up and down completely randomly.
Pair Corralation between KMH Hitech and Daejung Chemicals
Assuming the 90 days trading horizon KMH Hitech Co is expected to generate 1.26 times more return on investment than Daejung Chemicals. However, KMH Hitech is 1.26 times more volatile than Daejung Chemicals Metals. It trades about 0.24 of its potential returns per unit of risk. Daejung Chemicals Metals is currently generating about 0.15 per unit of risk. If you would invest 88,100 in KMH Hitech Co on October 16, 2024 and sell it today you would earn a total of 5,500 from holding KMH Hitech Co or generate 6.24% 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. Daejung Chemicals Metals
Performance |
| Timeline |
| KMH Hitech |
| Daejung Chemicals Metals |
KMH Hitech and Daejung Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KMH Hitech and Daejung Chemicals
The main advantage of trading using opposite KMH Hitech and Daejung Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KMH Hitech position performs unexpectedly, Daejung Chemicals 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 Daejung Chemicals will offset losses from the drop in Daejung Chemicals' long position.| KMH Hitech vs. LG Household Healthcare | KMH Hitech vs. SungMoon Electronics Co | KMH Hitech vs. System and Application | KMH Hitech vs. Daeduck Electronics Co |
| Daejung Chemicals vs. Hwangkum Steel Technology | Daejung Chemicals vs. Aprogen Healthcare Games | Daejung Chemicals vs. FNSTech Co | Daejung Chemicals vs. KMH Hitech 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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