Correlation Between Innowireless and KMH Hitech
Can any of the company-specific risk be diversified away by investing in both Innowireless 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 Innowireless and KMH Hitech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innowireless Co and KMH Hitech Co, you can compare the effects of market volatilities on Innowireless 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 Innowireless with a short position of KMH Hitech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innowireless and KMH Hitech.
Diversification Opportunities for Innowireless and KMH Hitech
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Innowireless and KMH is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Innowireless 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 Innowireless 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 Innowireless 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 Innowireless i.e., Innowireless and KMH Hitech go up and down completely randomly.
Pair Corralation between Innowireless and KMH Hitech
Assuming the 90 days trading horizon Innowireless Co is expected to under-perform the KMH Hitech. But the stock apears to be less risky and, when comparing its historical volatility, Innowireless Co is 1.01 times less risky than KMH Hitech. The stock trades about -0.03 of its potential returns per unit of risk. The KMH Hitech Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 132,600 in KMH Hitech Co on October 12, 2024 and sell it today you would lose (37,000) from holding KMH Hitech Co or give up 27.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.82% |
| Values | Daily Returns |
Innowireless Co vs. KMH Hitech Co
Performance |
| Timeline |
| Innowireless |
| KMH Hitech |
Innowireless and KMH Hitech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innowireless and KMH Hitech
The main advantage of trading using opposite Innowireless and KMH Hitech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innowireless 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.| Innowireless vs. Jin Air Co | Innowireless vs. Automobile Pc | Innowireless vs. Green Cross Medical | Innowireless vs. Digital Power Communications |
| KMH Hitech vs. Hyundai Home Shopping | KMH Hitech vs. Samyang Foods Co | KMH Hitech vs. Innowireless Co | KMH Hitech vs. Mobileleader CoLtd |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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