Correlation Between KHVATEC CoLtd and Wemade CoLtd
Can any of the company-specific risk be diversified away by investing in both KHVATEC CoLtd and Wemade CoLtd 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 KHVATEC CoLtd and Wemade CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KHVATEC CoLtd and Wemade CoLtd, you can compare the effects of market volatilities on KHVATEC CoLtd and Wemade CoLtd 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 KHVATEC CoLtd with a short position of Wemade CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of KHVATEC CoLtd and Wemade CoLtd.
Diversification Opportunities for KHVATEC CoLtd and Wemade CoLtd
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between KHVATEC and Wemade is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding KHVATEC CoLtd and Wemade CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wemade CoLtd and KHVATEC CoLtd 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 KHVATEC CoLtd are associated (or correlated) with Wemade CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wemade CoLtd has no effect on the direction of KHVATEC CoLtd i.e., KHVATEC CoLtd and Wemade CoLtd go up and down completely randomly.
Pair Corralation between KHVATEC CoLtd and Wemade CoLtd
Assuming the 90 days trading horizon KHVATEC CoLtd is expected to under-perform the Wemade CoLtd. But the stock apears to be less risky and, when comparing its historical volatility, KHVATEC CoLtd is 1.86 times less risky than Wemade CoLtd. The stock trades about -0.17 of its potential returns per unit of risk. The Wemade CoLtd is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,675,000 in Wemade CoLtd on September 13, 2024 and sell it today you would earn a total of 485,000 from holding Wemade CoLtd or generate 13.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
KHVATEC CoLtd vs. Wemade CoLtd
Performance |
| Timeline |
| KHVATEC CoLtd |
| Wemade CoLtd |
KHVATEC CoLtd and Wemade CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KHVATEC CoLtd and Wemade CoLtd
The main advantage of trading using opposite KHVATEC CoLtd and Wemade CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KHVATEC CoLtd position performs unexpectedly, Wemade CoLtd 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 Wemade CoLtd will offset losses from the drop in Wemade CoLtd's long position.| KHVATEC CoLtd vs. Cube Entertainment | KHVATEC CoLtd vs. Dreamus Company | KHVATEC CoLtd vs. LG Energy Solution | KHVATEC CoLtd vs. Dongwon System |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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