Correlation Between RPBio and KMH Hitech
Can any of the company-specific risk be diversified away by investing in both RPBio 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 RPBio and KMH Hitech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RPBio Inc and KMH Hitech Co, you can compare the effects of market volatilities on RPBio 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 RPBio with a short position of KMH Hitech. Check out your portfolio center. Please also check ongoing floating volatility patterns of RPBio and KMH Hitech.
Diversification Opportunities for RPBio and KMH Hitech
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between RPBio and KMH is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding RPBio Inc and KMH Hitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KMH Hitech and RPBio 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 RPBio Inc 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 RPBio i.e., RPBio and KMH Hitech go up and down completely randomly.
Pair Corralation between RPBio and KMH Hitech
Assuming the 90 days trading horizon RPBio is expected to generate 2.33 times less return on investment than KMH Hitech. In addition to that, RPBio is 1.62 times more volatile than KMH Hitech Co. It trades about 0.12 of its total potential returns per unit of risk. KMH Hitech Co is currently generating about 0.46 per unit of volatility. 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 |
RPBio Inc vs. KMH Hitech Co
Performance |
| Timeline |
| RPBio Inc |
| KMH Hitech |
RPBio and KMH Hitech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RPBio and KMH Hitech
The main advantage of trading using opposite RPBio and KMH Hitech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RPBio 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.| RPBio vs. Dongbang Transport Logistics | RPBio vs. Ssangyong Information Communication | RPBio vs. Nable Communications | RPBio vs. Daishin Information 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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