Correlation Between KMH Hitech and Alton Sports
Can any of the company-specific risk be diversified away by investing in both KMH Hitech and Alton Sports 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 Alton Sports 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 Alton Sports CoLtd, you can compare the effects of market volatilities on KMH Hitech and Alton Sports 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 Alton Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of KMH Hitech and Alton Sports.
Diversification Opportunities for KMH Hitech and Alton Sports
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KMH and Alton is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding KMH Hitech Co and Alton Sports CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alton Sports CoLtd 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 Alton Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alton Sports CoLtd has no effect on the direction of KMH Hitech i.e., KMH Hitech and Alton Sports go up and down completely randomly.
Pair Corralation between KMH Hitech and Alton Sports
Assuming the 90 days trading horizon KMH Hitech Co is expected to generate 0.93 times more return on investment than Alton Sports. However, KMH Hitech Co is 1.08 times less risky than Alton Sports. It trades about -0.02 of its potential returns per unit of risk. Alton Sports CoLtd is currently generating about -0.08 per unit of risk. If you would invest 133,800 in KMH Hitech Co on October 27, 2024 and sell it today you would lose (33,700) from holding KMH Hitech Co or give up 25.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KMH Hitech Co vs. Alton Sports CoLtd
Performance |
| Timeline |
| KMH Hitech |
| Alton Sports CoLtd |
KMH Hitech and Alton Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KMH Hitech and Alton Sports
The main advantage of trading using opposite KMH Hitech and Alton Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KMH Hitech position performs unexpectedly, Alton Sports 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 Alton Sports will offset losses from the drop in Alton Sports' long position.| KMH Hitech vs. Kakao Games Corp | KMH Hitech vs. Daewoo Electronic Components | KMH Hitech vs. UJU Electronics Co | KMH Hitech vs. Display Tech Co |
| Alton Sports vs. Samsung Electronics Co | Alton Sports vs. Samsung Electronics Co | Alton Sports vs. KB Financial Group | Alton Sports vs. Shinhan Financial Group |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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