Correlation Between KMH Hitech and Bosung Power

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

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

Diversification Opportunities for KMH Hitech and Bosung Power

0.83

Correlation Coefficient

KMH Hitech  Bosung Power

Very poor diversification

The 3 months correlation between KMH and Bosung is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding KMH Hitech Co and Bosung Power Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bosung Power Technology and KMH Hitech 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 KMH Hitech Co are associated (or correlated) with Bosung Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bosung Power Technology has no effect on the direction of KMH Hitech i.e., KMH Hitech and Bosung Power go up and down completely randomly.

Pair Corralation between KMH Hitech and Bosung Power

Assuming the 90 days trading horizon KMH Hitech Co is expected to generate 0.79 times more return on investment than Bosung Power. However, KMH Hitech Co is 1.26 times less risky than Bosung Power. It trades about 0.09 of its potential returns per unit of risk. Bosung Power Technology is currently generating about 0.05 per unit of risk. If you would invest  90,100  in KMH Hitech Co on December 23, 2024 and sell it today you would earn a total of  7,200  from holding KMH Hitech Co or generate 7.99% return on investment over 90 days.

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

KMH Hitech Co  vs.  Bosung Power Technology

KMH Hitech

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KMH Hitech Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KMH Hitech may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Bosung Power Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bosung Power Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Bosung Power is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KMH Hitech and Bosung Power

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

The idea behind KMH Hitech Co and Bosung Power Technology 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.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.