Correlation Between Khgears International and Hiwin Technologies

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

By analyzing existing cross correlation between Khgears International Limited and Hiwin Technologies Corp, you can compare the effects of market volatilities on Khgears International and Hiwin Technologies 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 Khgears International with a short position of Hiwin Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Khgears International and Hiwin Technologies.

Diversification Opportunities for Khgears International and Hiwin Technologies

0.57

Correlation Coefficient

Khgears International  Hiwin Technologies

Very weak diversification

The 3 months correlation between Khgears and Hiwin is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Khgears International Limited and Hiwin Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hiwin Technologies Corp and Khgears International 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 Khgears International Limited are associated (or correlated) with Hiwin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hiwin Technologies Corp has no effect on the direction of Khgears International i.e., Khgears International and Hiwin Technologies go up and down completely randomly.

Pair Corralation between Khgears International and Hiwin Technologies

Assuming the 90 days trading horizon Khgears International Limited is expected to generate 1.52 times more return on investment than Hiwin Technologies. However, Khgears International is 1.52 times more volatile than Hiwin Technologies Corp. It trades about 0.44 of its potential returns per unit of risk. Hiwin Technologies Corp is currently generating about 0.33 per unit of risk. If you would invest  16,300  in Khgears International Limited on September 22, 2024 and sell it today you would earn a total of  8,900  from holding Khgears International Limited or generate 54.6% return on investment over 90 days.

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

Khgears International Limited  vs.  Hiwin Technologies Corp

Khgears International

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Khgears International Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Khgears International showed solid returns over the last few months and may actually be approaching a breakup point.

Hiwin Technologies Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hiwin Technologies Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hiwin Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Khgears International and Hiwin Technologies

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

The idea behind Khgears International Limited and Hiwin Technologies Corp 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 CEOs Directory module to screen CEOs from public companies around the world.