Correlation Between Vissem Electronics and KMH Hitech
Can any of the company-specific risk be diversified away by investing in both Vissem Electronics and KMH Hitech 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 Vissem Electronics and KMH Hitech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vissem Electronics Co and KMH Hitech Co, you can compare the effects of market volatilities on Vissem Electronics and KMH Hitech 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 Vissem Electronics with a short position of KMH Hitech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vissem Electronics and KMH Hitech.
Diversification Opportunities for Vissem Electronics and KMH Hitech
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vissem and KMH is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Vissem Electronics Co and KMH Hitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KMH Hitech and Vissem Electronics 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 Vissem Electronics Co are associated (or correlated) with KMH Hitech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KMH Hitech has no effect on the direction of Vissem Electronics i.e., Vissem Electronics and KMH Hitech go up and down completely randomly.
Pair Corralation between Vissem Electronics and KMH Hitech
Assuming the 90 days trading horizon Vissem Electronics is expected to generate 1.61 times less return on investment than KMH Hitech. But when comparing it to its historical volatility, Vissem Electronics Co is 1.37 times less risky than KMH Hitech. It trades about 0.2 of its potential returns per unit of risk. KMH Hitech Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 90,100 in KMH Hitech Co on October 23, 2024 and sell it today you would earn a total of 6,800 from holding KMH Hitech Co or generate 7.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.74% |
| Values | Daily Returns |
Vissem Electronics Co vs. KMH Hitech Co
Performance |
| Timeline |
| Vissem Electronics |
| KMH Hitech |
Vissem Electronics and KMH Hitech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vissem Electronics and KMH Hitech
The main advantage of trading using opposite Vissem Electronics and KMH Hitech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vissem Electronics position performs unexpectedly, KMH Hitech 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 KMH Hitech will offset losses from the drop in KMH Hitech's long position.| Vissem Electronics vs. Cuckoo Homesys Co | Vissem Electronics vs. E Investment Development | Vissem Electronics vs. KTB Investment Securities | Vissem Electronics vs. SV Investment |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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