Correlation Between Kaonmedia and HLB Pharmaceutical

Can any of the company-specific risk be diversified away by investing in both Kaonmedia and HLB Pharmaceutical 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 Kaonmedia and HLB Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kaonmedia Co and HLB Pharmaceutical Co, you can compare the effects of market volatilities on Kaonmedia and HLB Pharmaceutical 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 Kaonmedia with a short position of HLB Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaonmedia and HLB Pharmaceutical.

Diversification Opportunities for Kaonmedia and HLB Pharmaceutical

0.43

Correlation Coefficient

Kaonmedia  HLB Pharmaceutical

Very weak diversification

The 3 months correlation between Kaonmedia and HLB is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Kaonmedia Co and HLB Pharmaceutical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HLB Pharmaceutical and Kaonmedia 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 Kaonmedia Co are associated (or correlated) with HLB Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HLB Pharmaceutical has no effect on the direction of Kaonmedia i.e., Kaonmedia and HLB Pharmaceutical go up and down completely randomly.

Pair Corralation between Kaonmedia and HLB Pharmaceutical

Assuming the 90 days trading horizon Kaonmedia is expected to generate 14.9 times less return on investment than HLB Pharmaceutical. But when comparing it to its historical volatility, Kaonmedia Co is 1.48 times less risky than HLB Pharmaceutical. It trades about 0.02 of its potential returns per unit of risk. HLB Pharmaceutical Co is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,185,000  in HLB Pharmaceutical Co on December 2, 2024 and sell it today you would earn a total of  890,000  from holding HLB Pharmaceutical Co or generate 40.73% return on investment over 90 days.

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

Kaonmedia Co  vs.  HLB Pharmaceutical Co

Kaonmedia

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kaonmedia Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Kaonmedia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

HLB Pharmaceutical

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HLB Pharmaceutical Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HLB Pharmaceutical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kaonmedia and HLB Pharmaceutical

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

The idea behind Kaonmedia Co and HLB Pharmaceutical 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.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.