Correlation Between KPX Green and Hanshin Construction
Can any of the company-specific risk be diversified away by investing in both KPX Green and Hanshin Construction 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 KPX Green and Hanshin Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KPX Green Chemical and Hanshin Construction Co, you can compare the effects of market volatilities on KPX Green and Hanshin Construction 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 KPX Green with a short position of Hanshin Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of KPX Green and Hanshin Construction.
Diversification Opportunities for KPX Green and Hanshin Construction
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KPX and Hanshin is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding KPX Green Chemical and Hanshin Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanshin Construction and KPX Green 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 KPX Green Chemical are associated (or correlated) with Hanshin Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanshin Construction has no effect on the direction of KPX Green i.e., KPX Green and Hanshin Construction go up and down completely randomly.
Pair Corralation between KPX Green and Hanshin Construction
Assuming the 90 days trading horizon KPX Green Chemical is expected to generate 1.51 times more return on investment than Hanshin Construction. However, KPX Green is 1.51 times more volatile than Hanshin Construction Co. It trades about 0.07 of its potential returns per unit of risk. Hanshin Construction Co is currently generating about -0.01 per unit of risk. If you would invest 613,813 in KPX Green Chemical on October 14, 2024 and sell it today you would earn a total of 84,187 from holding KPX Green Chemical or generate 13.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KPX Green Chemical vs. Hanshin Construction Co
Performance |
| Timeline |
| KPX Green Chemical |
| Hanshin Construction |
KPX Green and Hanshin Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KPX Green and Hanshin Construction
The main advantage of trading using opposite KPX Green and Hanshin Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KPX Green position performs unexpectedly, Hanshin Construction 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 Hanshin Construction will offset losses from the drop in Hanshin Construction's long position.| KPX Green vs. CKH Food Health | KPX Green vs. Keyang Electric Machinery | KPX Green vs. Nam Hwa Construction | KPX Green vs. Hanshin Construction Co |
| Hanshin Construction vs. BGF Retail Co | Hanshin Construction vs. Lotte Chilsung Beverage | Hanshin Construction vs. Heungkuk Metaltech CoLtd | Hanshin Construction vs. Haitai Confectionery Foods |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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