Correlation Between KMH Hitech and Insung Information

Can any of the company-specific risk be diversified away by investing in both KMH Hitech and Insung Information 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 Insung Information 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 Insung Information Co, you can compare the effects of market volatilities on KMH Hitech and Insung Information 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 Insung Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of KMH Hitech and Insung Information.

Diversification Opportunities for KMH Hitech and Insung Information

0.78

Correlation Coefficient

KMH Hitech  Insung Information

Poor diversification

The 3 months correlation between KMH and Insung is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding KMH Hitech Co and Insung Information Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insung Information 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 Insung Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insung Information has no effect on the direction of KMH Hitech i.e., KMH Hitech and Insung Information go up and down completely randomly.

Pair Corralation between KMH Hitech and Insung Information

Assuming the 90 days trading horizon KMH Hitech Co is expected to generate 0.71 times more return on investment than Insung Information. However, KMH Hitech Co is 1.4 times less risky than Insung Information. It trades about 0.23 of its potential returns per unit of risk. Insung Information Co is currently generating about 0.1 per unit of risk. If you would invest  90,100  in KMH Hitech Co on October 24, 2024 and sell it today you would earn a total of  6,800  from holding KMH Hitech Co or generate 7.55% return on investment over 90 days.

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

KMH Hitech Co  vs.  Insung Information Co

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.

Insung Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Insung Information Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Insung Information 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 Insung Information

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

The idea behind KMH Hitech Co and Insung Information 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.