Correlation Between KMH Hitech and Puloon Technology

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

Diversification Opportunities for KMH Hitech and Puloon Technology

0.01

Correlation Coefficient

KMH Hitech  Puloon Technology

Significant diversification

The 3 months correlation between KMH and Puloon is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding KMH Hitech Co and Puloon Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puloon 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 Puloon Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Puloon Technology has no effect on the direction of KMH Hitech i.e., KMH Hitech and Puloon Technology go up and down completely randomly.

Pair Corralation between KMH Hitech and Puloon Technology

Assuming the 90 days trading horizon KMH Hitech is expected to generate 1.43 times less return on investment than Puloon Technology. But when comparing it to its historical volatility, KMH Hitech Co is 2.89 times less risky than Puloon Technology. It trades about 0.59 of its potential returns per unit of risk. Puloon Technology is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  575,469  in Puloon Technology on October 9, 2024 and sell it today you would earn a total of  148,531  from holding Puloon Technology or generate 25.81% return on investment over 90 days.

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

KMH Hitech Co  vs.  Puloon Technology

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.

Puloon Technology

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Puloon Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Puloon Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KMH Hitech and Puloon Technology

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

The idea behind KMH Hitech Co and Puloon 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 Global Correlations module to find global opportunities by holding instruments from different markets.