Correlation Between Kmw and Hanwha Techwin

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

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

Diversification Opportunities for Kmw and Hanwha Techwin

0.3

Correlation Coefficient

Kmw  Hanwha Techwin

Weak diversification

The 3 months correlation between Kmw and Hanwha is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Kmw Inc and Hanwha Techwin Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha Techwin and Kmw 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 Kmw Inc are associated (or correlated) with Hanwha Techwin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha Techwin has no effect on the direction of Kmw i.e., Kmw and Hanwha Techwin go up and down completely randomly.

Pair Corralation between Kmw and Hanwha Techwin

Assuming the 90 days trading horizon Kmw Inc is expected to generate 0.86 times more return on investment than Hanwha Techwin. However, Kmw Inc is 1.16 times less risky than Hanwha Techwin. It trades about 0.06 of its potential returns per unit of risk. Hanwha Techwin Co is currently generating about -0.01 per unit of risk. If you would invest  718,000  in Kmw Inc on September 13, 2024 and sell it today you would earn a total of  61,000  from holding Kmw Inc or generate 8.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	87.93%
Values	Daily Returns

Kmw Inc  vs.  Hanwha Techwin Co

Kmw Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kmw Inc are ranked lower than 4 (%) 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.

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.

Pair Trading with Kmw and Hanwha Techwin

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

The idea behind Kmw Inc and Hanwha Techwin 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.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.