Correlation Between Kmw and NH SPAC

Can any of the company-specific risk be diversified away by investing in both Kmw and NH SPAC 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 Kmw and NH SPAC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kmw Inc and NH SPAC 8, you can compare the effects of market volatilities on Kmw and NH SPAC 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 Kmw with a short position of NH SPAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kmw and NH SPAC.

Diversification Opportunities for Kmw and NH SPAC

0.46

Correlation Coefficient

Kmw  NH SPAC

Very weak diversification

The 3 months correlation between Kmw and 218410 is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Kmw Inc and NH SPAC 8 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH SPAC 8 and Kmw 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 Kmw Inc are associated (or correlated) with NH SPAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH SPAC 8 has no effect on the direction of Kmw i.e., Kmw and NH SPAC go up and down completely randomly.

Pair Corralation between Kmw and NH SPAC

Assuming the 90 days trading horizon Kmw Inc is expected to generate 1.3 times more return on investment than NH SPAC. However, Kmw is 1.3 times more volatile than NH SPAC 8. It trades about 0.12 of its potential returns per unit of risk. NH SPAC 8 is currently generating about 0.05 per unit of risk. If you would invest  780,000  in Kmw Inc on October 7, 2024 and sell it today you would earn a total of  146,000  from holding Kmw Inc or generate 18.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Kmw Inc  vs.  NH SPAC 8

Kmw Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kmw Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kmw sustained solid returns over the last few months and may actually be approaching a breakup point.

NH SPAC 8

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NH SPAC 8 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NH SPAC sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kmw and NH SPAC

The main advantage of trading using opposite Kmw and NH SPAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kmw position performs unexpectedly, NH SPAC 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 NH SPAC will offset losses from the drop in NH SPAC's long position.

The idea behind Kmw Inc and NH SPAC 8 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.