Correlation Between IC Technology and KMH Hitech

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

By analyzing existing cross correlation between IC Technology Co and KMH Hitech Co, you can compare the effects of market volatilities on IC Technology 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 IC Technology with a short position of KMH Hitech. Check out your portfolio center. Please also check ongoing floating volatility patterns of IC Technology and KMH Hitech.

Diversification Opportunities for IC Technology and KMH Hitech

-0.24

Correlation Coefficient

IC Technology  KMH Hitech

Very good diversification

The 3 months correlation between 052860 and KMH is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding IC Technology 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 IC Technology 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 IC Technology 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 IC Technology i.e., IC Technology and KMH Hitech go up and down completely randomly.

Pair Corralation between IC Technology and KMH Hitech

Assuming the 90 days trading horizon IC Technology Co is expected to generate 1.56 times more return on investment than KMH Hitech. However, IC Technology is 1.56 times more volatile than KMH Hitech Co. It trades about -0.01 of its potential returns per unit of risk. KMH Hitech Co is currently generating about -0.02 per unit of risk. If you would invest  259,500  in IC Technology Co on October 11, 2024 and sell it today you would lose (79,500) from holding IC Technology Co or give up 30.64% of portfolio value over 90 days.

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

IC Technology Co  vs.  KMH Hitech Co

IC Technology

Risk-Adjusted Performance

3 of 100

Insignificant

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

KMH Hitech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KMH Hitech Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KMH Hitech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IC Technology and KMH Hitech

The main advantage of trading using opposite IC Technology and KMH Hitech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IC Technology 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.

The idea behind IC Technology Co and KMH Hitech Co 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.