Correlation Between Hannong Chemicals and KMH Hitech
Can any of the company-specific risk be diversified away by investing in both Hannong Chemicals 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 Hannong Chemicals and KMH Hitech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannong Chemicals and KMH Hitech Co, you can compare the effects of market volatilities on Hannong Chemicals 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 Hannong Chemicals with a short position of KMH Hitech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannong Chemicals and KMH Hitech.
Diversification Opportunities for Hannong Chemicals and KMH Hitech
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hannong and KMH is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Hannong Chemicals and KMH Hitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KMH Hitech and Hannong Chemicals 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 Hannong Chemicals 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 Hannong Chemicals i.e., Hannong Chemicals and KMH Hitech go up and down completely randomly.
Pair Corralation between Hannong Chemicals and KMH Hitech
Assuming the 90 days trading horizon Hannong Chemicals is expected to generate 2.31 times more return on investment than KMH Hitech. However, Hannong Chemicals is 2.31 times more volatile than KMH Hitech Co. It trades about 0.0 of its potential returns per unit of risk. KMH Hitech Co is currently generating about -0.11 per unit of risk. If you would invest 1,538,999 in Hannong Chemicals on September 29, 2024 and sell it today you would lose (230,999) from holding Hannong Chemicals or give up 15.01% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Hannong Chemicals vs. KMH Hitech Co
Performance |
Timeline |
Hannong Chemicals |
KMH Hitech |
Hannong Chemicals and KMH Hitech Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hannong Chemicals and KMH Hitech
The main advantage of trading using opposite Hannong Chemicals and KMH Hitech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannong Chemicals 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.Hannong Chemicals vs. AptaBio Therapeutics | Hannong Chemicals vs. Wonbang Tech Co | Hannong Chemicals vs. Busan Industrial Co | Hannong Chemicals vs. Busan Ind |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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