Correlation Between KMH Hitech and RPBio
Can any of the company-specific risk be diversified away by investing in both KMH Hitech and RPBio 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 RPBio 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 RPBio Inc, you can compare the effects of market volatilities on KMH Hitech and RPBio 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 RPBio. Check out your portfolio center. Please also check ongoing floating volatility patterns of KMH Hitech and RPBio.
Diversification Opportunities for KMH Hitech and RPBio
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between KMH and RPBio is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding KMH Hitech Co and RPBio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RPBio Inc 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 RPBio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RPBio Inc has no effect on the direction of KMH Hitech i.e., KMH Hitech and RPBio go up and down completely randomly.
Pair Corralation between KMH Hitech and RPBio
Assuming the 90 days trading horizon KMH Hitech Co is expected to generate 0.62 times more return on investment than RPBio. However, KMH Hitech Co is 1.62 times less risky than RPBio. It trades about 0.46 of its potential returns per unit of risk. RPBio Inc is currently generating about 0.12 per unit of risk. If you would invest 85,300 in KMH Hitech Co on October 13, 2024 and sell it today you would earn a total of 10,300 from holding KMH Hitech Co or generate 12.08% 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. RPBio Inc
Performance |
| Timeline |
| KMH Hitech |
| RPBio Inc |
KMH Hitech and RPBio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KMH Hitech and RPBio
The main advantage of trading using opposite KMH Hitech and RPBio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KMH Hitech position performs unexpectedly, RPBio 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 RPBio will offset losses from the drop in RPBio'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 |
| RPBio vs. Dongbang Transport Logistics | RPBio vs. Ssangyong Information Communication | RPBio vs. Nable Communications | RPBio vs. Daishin Information Communications |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |