Correlation Between Humax Holdings and KHVATEC CoLtd

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

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

Diversification Opportunities for Humax Holdings and KHVATEC CoLtd

0.49

Correlation Coefficient

Humax Holdings  KHVATEC CoLtd

Very weak diversification

The 3 months correlation between Humax and KHVATEC is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Humax Holdings Co and KHVATEC CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KHVATEC CoLtd and Humax Holdings 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 Humax Holdings Co are associated (or correlated) with KHVATEC CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KHVATEC CoLtd has no effect on the direction of Humax Holdings i.e., Humax Holdings and KHVATEC CoLtd go up and down completely randomly.

Pair Corralation between Humax Holdings and KHVATEC CoLtd

Assuming the 90 days trading horizon Humax Holdings Co is expected to under-perform the KHVATEC CoLtd. In addition to that, Humax Holdings is 1.56 times more volatile than KHVATEC CoLtd. It trades about -0.21 of its total potential returns per unit of risk. KHVATEC CoLtd is currently generating about -0.23 per unit of volatility. If you would invest  1,040,000  in KHVATEC CoLtd on September 14, 2024 and sell it today you would lose (259,000) from holding KHVATEC CoLtd or give up 24.9% of portfolio value over 90 days.

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

Humax Holdings Co  vs.  KHVATEC CoLtd

Humax Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Humax Holdings 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.

KHVATEC CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KHVATEC CoLtd 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 Humax Holdings and KHVATEC CoLtd

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

The idea behind Humax Holdings Co and KHVATEC CoLtd 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.