Correlation Between KMH Hitech and KHVATEC CoLtd

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

Diversification Opportunities for KMH Hitech and KHVATEC CoLtd

0.9

Correlation Coefficient

KMH Hitech  KHVATEC CoLtd

Almost no diversification

The 3 months correlation between KMH and KHVATEC is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding KMH Hitech Co and KHVATEC CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KHVATEC CoLtd 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 KHVATEC CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KHVATEC CoLtd has no effect on the direction of KMH Hitech i.e., KMH Hitech and KHVATEC CoLtd go up and down completely randomly.

Pair Corralation between KMH Hitech and KHVATEC CoLtd

Assuming the 90 days trading horizon KMH Hitech is expected to generate 1.82 times less return on investment than KHVATEC CoLtd. But when comparing it to its historical volatility, KMH Hitech Co is 1.89 times less risky than KHVATEC CoLtd. It trades about 0.09 of its potential returns per unit of risk. KHVATEC CoLtd is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  823,835  in KHVATEC CoLtd on December 23, 2024 and sell it today you would earn a total of  113,165  from holding KHVATEC CoLtd or generate 13.74% return on investment over 90 days.

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

KMH Hitech Co  vs.  KHVATEC CoLtd

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.

KHVATEC CoLtd

Risk-Adjusted Performance

OK

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

Pair Trading with KMH Hitech and KHVATEC CoLtd

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

The idea behind KMH Hitech Co and KHVATEC CoLtd 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.