Correlation Between KMH Hitech and APS Holdings

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

Diversification Opportunities for KMH Hitech and APS Holdings

0.09

Correlation Coefficient

KMH Hitech  APS Holdings

Significant diversification

The 3 months correlation between KMH and APS is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding KMH Hitech Co and APS Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APS Holdings 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 APS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APS Holdings has no effect on the direction of KMH Hitech i.e., KMH Hitech and APS Holdings go up and down completely randomly.

Pair Corralation between KMH Hitech and APS Holdings

Assuming the 90 days trading horizon KMH Hitech Co is expected to generate 0.9 times more return on investment than APS Holdings. However, KMH Hitech Co is 1.11 times less risky than APS Holdings. It trades about 0.1 of its potential returns per unit of risk. APS Holdings is currently generating about -0.18 per unit of risk. If you would invest  90,800  in KMH Hitech Co on October 26, 2024 and sell it today you would earn a total of  7,300  from holding KMH Hitech Co or generate 8.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

KMH Hitech Co  vs.  APS Holdings

KMH Hitech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KMH Hitech Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

APS Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days APS Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with KMH Hitech and APS Holdings

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

The idea behind KMH Hitech Co and APS Holdings 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.