Correlation Between KMH Hitech and Wonik Ips

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

Diversification Opportunities for KMH Hitech and Wonik Ips

0.82

Correlation Coefficient

KMH Hitech  Wonik Ips

Very poor diversification

The 3 months correlation between KMH and Wonik is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding KMH Hitech Co and Wonik Ips Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wonik Ips 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 Wonik Ips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wonik Ips has no effect on the direction of KMH Hitech i.e., KMH Hitech and Wonik Ips go up and down completely randomly.

Pair Corralation between KMH Hitech and Wonik Ips

Assuming the 90 days trading horizon KMH Hitech is expected to generate 1.01 times less return on investment than Wonik Ips. But when comparing it to its historical volatility, KMH Hitech Co is 1.46 times less risky than Wonik Ips. It trades about 0.23 of its potential returns per unit of risk. Wonik Ips Co is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,260,000  in Wonik Ips Co on October 23, 2024 and sell it today you would earn a total of  165,000  from holding Wonik Ips Co or generate 7.3% return on investment over 90 days.

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

KMH Hitech Co  vs.  Wonik Ips 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.

Wonik Ips

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wonik Ips Co 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 Wonik Ips

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

The idea behind KMH Hitech Co and Wonik Ips 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.

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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.