Correlation Between KHVATEC CoLtd and Humax

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

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

Diversification Opportunities for KHVATEC CoLtd and Humax

0.83

Correlation Coefficient

KHVATEC CoLtd  Humax

Very poor diversification

The 3 months correlation between KHVATEC and Humax is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding KHVATEC CoLtd and Humax Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humax and KHVATEC CoLtd 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 KHVATEC CoLtd are associated (or correlated) with Humax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humax has no effect on the direction of KHVATEC CoLtd i.e., KHVATEC CoLtd and Humax go up and down completely randomly.

Pair Corralation between KHVATEC CoLtd and Humax

Assuming the 90 days trading horizon KHVATEC CoLtd is expected to generate 0.83 times more return on investment than Humax. However, KHVATEC CoLtd is 1.2 times less risky than Humax. It trades about -0.21 of its potential returns per unit of risk. Humax Co is currently generating about -0.33 per unit of risk. If you would invest  1,043,000  in KHVATEC CoLtd on September 12, 2024 and sell it today you would lose (239,000) from holding KHVATEC CoLtd or give up 22.91% of portfolio value over 90 days.

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

KHVATEC CoLtd  vs.  Humax Co

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.

Humax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Humax 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 KHVATEC CoLtd and Humax

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

The idea behind KHVATEC CoLtd and Humax 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.