Correlation Between KMH Hitech and Design
Can any of the company-specific risk be diversified away by investing in both KMH Hitech and Design 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 Design 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 Design Co, you can compare the effects of market volatilities on KMH Hitech and Design 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 Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of KMH Hitech and Design.
Diversification Opportunities for KMH Hitech and Design
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KMH and Design is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding KMH Hitech Co and Design Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Design 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 Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Design has no effect on the direction of KMH Hitech i.e., KMH Hitech and Design go up and down completely randomly.
Pair Corralation between KMH Hitech and Design
Assuming the 90 days trading horizon KMH Hitech Co is expected to under-perform the Design. But the stock apears to be less risky and, when comparing its historical volatility, KMH Hitech Co is 3.86 times less risky than Design. The stock trades about -0.04 of its potential returns per unit of risk. The Design Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 362,500 in Design Co on August 31, 2024 and sell it today you would lose (267,200) from holding Design Co or give up 73.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.95% |
| Values | Daily Returns |
KMH Hitech Co vs. Design Co
Performance |
| Timeline |
| KMH Hitech |
| Design |
KMH Hitech and Design Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KMH Hitech and Design
The main advantage of trading using opposite KMH Hitech and Design positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KMH Hitech position performs unexpectedly, Design 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 Design will offset losses from the drop in Design's long position.| KMH Hitech vs. Dongsin Engineering Construction | KMH Hitech vs. Doosan Fuel Cell | KMH Hitech vs. Daishin Balance 1 | KMH Hitech vs. Total Soft Bank |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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