Correlation Between KMH Hitech and ENERGYMACHINERY KOREA
Can any of the company-specific risk be diversified away by investing in both KMH Hitech and ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA CoLtd, you can compare the effects of market volatilities on KMH Hitech and ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA. Check out your portfolio center. Please also check ongoing floating volatility patterns of KMH Hitech and ENERGYMACHINERY KOREA.
Diversification Opportunities for KMH Hitech and ENERGYMACHINERY KOREA
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KMH and ENERGYMACHINERY is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding KMH Hitech Co and ENERGYMACHINERY KOREA CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENERGYMACHINERY KOREA has no effect on the direction of KMH Hitech i.e., KMH Hitech and ENERGYMACHINERY KOREA go up and down completely randomly.
Pair Corralation between KMH Hitech and ENERGYMACHINERY KOREA
Assuming the 90 days trading horizon KMH Hitech is expected to generate 2.3 times less return on investment than ENERGYMACHINERY KOREA. But when comparing it to its historical volatility, KMH Hitech Co is 2.12 times less risky than ENERGYMACHINERY KOREA. It trades about 0.52 of its potential returns per unit of risk. ENERGYMACHINERY KOREA CoLtd is currently generating about 0.56 of returns per unit of risk over similar time horizon. If you would invest 170,900 in ENERGYMACHINERY KOREA CoLtd on October 12, 2024 and sell it today you would earn a total of 59,600 from holding ENERGYMACHINERY KOREA CoLtd or generate 34.87% 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. ENERGYMACHINERY KOREA CoLtd
Performance |
Timeline |
KMH Hitech |
ENERGYMACHINERY KOREA |
KMH Hitech and ENERGYMACHINERY KOREA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with KMH Hitech and ENERGYMACHINERY KOREA
The main advantage of trading using opposite KMH Hitech and ENERGYMACHINERY KOREA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KMH Hitech position performs unexpectedly, ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA will offset losses from the drop in ENERGYMACHINERY KOREA's long position.KMH Hitech vs. Wireless Power Amplifier | KMH Hitech vs. Mobileleader CoLtd | KMH Hitech vs. Samick Musical Instruments | KMH Hitech vs. Ssangyong Information Communication |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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