Correlation Between Hanwha Techwin and Kmw

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

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

Diversification Opportunities for Hanwha Techwin and Kmw

0.31

Correlation Coefficient

Hanwha Techwin  Kmw

Weak diversification

The 3 months correlation between Hanwha and Kmw is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Techwin Co and Kmw Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kmw Inc and Hanwha Techwin 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 Hanwha Techwin Co are associated (or correlated) with Kmw. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kmw Inc has no effect on the direction of Hanwha Techwin i.e., Hanwha Techwin and Kmw go up and down completely randomly.

Pair Corralation between Hanwha Techwin and Kmw

Assuming the 90 days trading horizon Hanwha Techwin Co is expected to generate 0.83 times more return on investment than Kmw. However, Hanwha Techwin Co is 1.21 times less risky than Kmw. It trades about 0.08 of its potential returns per unit of risk. Kmw Inc is currently generating about -0.02 per unit of risk. If you would invest  14,206,700  in Hanwha Techwin Co on September 12, 2024 and sell it today you would earn a total of  14,893,300  from holding Hanwha Techwin Co or generate 104.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.71%
Values	Daily Returns

Hanwha Techwin Co  vs.  Kmw Inc

Hanwha Techwin

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kmw Inc

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kmw Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kmw may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hanwha Techwin and Kmw

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

The idea behind Hanwha Techwin Co and Kmw Inc 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 Commodity Directory module to find actively traded commodities issued by global exchanges.