Correlation Between Kmw and UNISEM

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

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

Diversification Opportunities for Kmw and UNISEM

-0.38

Correlation Coefficient

Kmw  UNISEM

Very good diversification

The 3 months correlation between Kmw and UNISEM is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Kmw Inc and UNISEM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNISEM 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 UNISEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNISEM has no effect on the direction of Kmw i.e., Kmw and UNISEM go up and down completely randomly.

Pair Corralation between Kmw and UNISEM

Assuming the 90 days trading horizon Kmw Inc is expected to generate 1.01 times more return on investment than UNISEM. However, Kmw is 1.01 times more volatile than UNISEM Co. It trades about 0.04 of its potential returns per unit of risk. UNISEM Co is currently generating about -0.07 per unit of risk. If you would invest  720,000  in Kmw Inc on September 12, 2024 and sell it today you would earn a total of  38,000  from holding Kmw Inc or generate 5.28% return on investment over 90 days.

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

Kmw Inc  vs.  UNISEM Co

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.

UNISEM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNISEM 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.

Pair Trading with Kmw and UNISEM

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

The idea behind Kmw Inc and UNISEM 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.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.