Correlation Between KMH Hitech and Lion Chemtech
Can any of the company-specific risk be diversified away by investing in both KMH Hitech and Lion Chemtech 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 Lion Chemtech 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 Lion Chemtech Co, you can compare the effects of market volatilities on KMH Hitech and Lion Chemtech 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 Lion Chemtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of KMH Hitech and Lion Chemtech.
Diversification Opportunities for KMH Hitech and Lion Chemtech
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KMH and Lion is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding KMH Hitech Co and Lion Chemtech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Chemtech 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 Lion Chemtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Chemtech has no effect on the direction of KMH Hitech i.e., KMH Hitech and Lion Chemtech go up and down completely randomly.
Pair Corralation between KMH Hitech and Lion Chemtech
Assuming the 90 days trading horizon KMH Hitech Co is expected to generate 0.38 times more return on investment than Lion Chemtech. However, KMH Hitech Co is 2.64 times less risky than Lion Chemtech. It trades about 0.18 of its potential returns per unit of risk. Lion Chemtech Co is currently generating about -0.13 per unit of risk. If you would invest 89,800 in KMH Hitech Co on October 20, 2024 and sell it today you would earn a total of 4,300 from holding KMH Hitech Co or generate 4.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KMH Hitech Co vs. Lion Chemtech Co
Performance |
| Timeline |
| KMH Hitech |
| Lion Chemtech |
KMH Hitech and Lion Chemtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KMH Hitech and Lion Chemtech
The main advantage of trading using opposite KMH Hitech and Lion Chemtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KMH Hitech position performs unexpectedly, Lion Chemtech 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 Lion Chemtech will offset losses from the drop in Lion Chemtech's long position.| KMH Hitech vs. Kukdo Chemical Co | KMH Hitech vs. Daejung Chemicals Metals | KMH Hitech vs. KTB Investment Securities | KMH Hitech vs. Woori Technology Investment |
| Lion Chemtech vs. RFTech Co | Lion Chemtech vs. Shinhan Inverse Silver | Lion Chemtech vs. Hanmi Semiconductor Co | Lion Chemtech vs. A Tech Solution 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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