Correlation Between Hurum and KNOTUS CoLtd
Can any of the company-specific risk be diversified away by investing in both Hurum and KNOTUS CoLtd 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 Hurum and KNOTUS CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hurum Co and KNOTUS CoLtd, you can compare the effects of market volatilities on Hurum and KNOTUS CoLtd 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 Hurum with a short position of KNOTUS CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hurum and KNOTUS CoLtd.
Diversification Opportunities for Hurum and KNOTUS CoLtd
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hurum and KNOTUS is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hurum Co and KNOTUS CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KNOTUS CoLtd and Hurum 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 Hurum Co are associated (or correlated) with KNOTUS CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KNOTUS CoLtd has no effect on the direction of Hurum i.e., Hurum and KNOTUS CoLtd go up and down completely randomly.
Pair Corralation between Hurum and KNOTUS CoLtd
Assuming the 90 days trading horizon Hurum Co is expected to generate 1.19 times more return on investment than KNOTUS CoLtd. However, Hurum is 1.19 times more volatile than KNOTUS CoLtd. It trades about -0.09 of its potential returns per unit of risk. KNOTUS CoLtd is currently generating about -0.24 per unit of risk. If you would invest 73,600 in Hurum Co on September 25, 2024 and sell it today you would lose (3,600) from holding Hurum Co or give up 4.89% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Hurum Co vs. KNOTUS CoLtd
Performance |
Timeline |
Hurum |
KNOTUS CoLtd |
Hurum and KNOTUS CoLtd Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hurum and KNOTUS CoLtd
The main advantage of trading using opposite Hurum and KNOTUS CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hurum position performs unexpectedly, KNOTUS CoLtd 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 KNOTUS CoLtd will offset losses from the drop in KNOTUS CoLtd's long position.Hurum vs. Samsung Electronics Co | Hurum vs. Samsung Electronics Co | Hurum vs. LG Energy Solution | Hurum vs. SK Hynix |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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