Correlation Between KPX Green and HYBE

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

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

Diversification Opportunities for KPX Green and HYBE

0.51

Correlation Coefficient

KPX Green  HYBE

Very weak diversification

The 3 months correlation between KPX and HYBE is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding KPX Green Chemical and HYBE Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYBE and KPX Green 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 KPX Green Chemical are associated (or correlated) with HYBE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYBE has no effect on the direction of KPX Green i.e., KPX Green and HYBE go up and down completely randomly.

Pair Corralation between KPX Green and HYBE

Assuming the 90 days trading horizon KPX Green Chemical is expected to under-perform the HYBE. In addition to that, KPX Green is 1.64 times more volatile than HYBE Co. It trades about -0.01 of its total potential returns per unit of risk. HYBE Co is currently generating about 0.13 per unit of volatility. If you would invest  19,972,800  in HYBE Co on December 21, 2024 and sell it today you would earn a total of  2,927,200  from holding HYBE Co or generate 14.66% return on investment over 90 days.

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

KPX Green Chemical  vs.  HYBE Co

KPX Green Chemical

Risk-Adjusted Performance

Weak

Over the last 90 days KPX Green Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KPX Green is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

HYBE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HYBE Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HYBE sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KPX Green and HYBE

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

The idea behind KPX Green Chemical and HYBE 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.