Correlation Between KB No2 and PH Tech

Can any of the company-specific risk be diversified away by investing in both KB No2 and PH Tech 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 KB No2 and PH Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KB No2 Special and PH Tech Co, you can compare the effects of market volatilities on KB No2 and PH Tech 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 KB No2 with a short position of PH Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB No2 and PH Tech.

Diversification Opportunities for KB No2 and PH Tech

0.63

Correlation Coefficient

KB No2  PH Tech

Poor diversification

The 3 months correlation between 192250 and 239890 is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding KB No2 Special and PH Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PH Tech and KB No2 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 KB No2 Special are associated (or correlated) with PH Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PH Tech has no effect on the direction of KB No2 i.e., KB No2 and PH Tech go up and down completely randomly.

Pair Corralation between KB No2 and PH Tech

Assuming the 90 days trading horizon KB No2 Special is expected to under-perform the PH Tech. But the stock apears to be less risky and, when comparing its historical volatility, KB No2 Special is 1.23 times less risky than PH Tech. The stock trades about -0.07 of its potential returns per unit of risk. The PH Tech Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  679,000  in PH Tech Co on September 25, 2024 and sell it today you would earn a total of  90,000  from holding PH Tech Co or generate 13.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	88.1%
Values	Daily Returns

KB No2 Special  vs.  PH Tech Co

KB No2 Special

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KB No2 Special 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

PH Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PH Tech 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with KB No2 and PH Tech

The main advantage of trading using opposite KB No2 and PH Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB No2 position performs unexpectedly, PH Tech 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 PH Tech will offset losses from the drop in PH Tech's long position.

The idea behind KB No2 Special and PH Tech 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.