Correlation Between SS TECH and Kmw

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

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

Diversification Opportunities for SS TECH and Kmw

0.32

Correlation Coefficient

SS TECH  Kmw

Weak diversification

The 3 months correlation between 101490 and Kmw is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding SS TECH and Kmw Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kmw Inc and SS TECH 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 SS TECH 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 SS TECH i.e., SS TECH and Kmw go up and down completely randomly.

Pair Corralation between SS TECH and Kmw

Assuming the 90 days trading horizon SS TECH is expected to generate 0.9 times more return on investment than Kmw. However, SS TECH is 1.11 times less risky than Kmw. It trades about 0.01 of its potential returns per unit of risk. Kmw Inc is currently generating about -0.05 per unit of risk. If you would invest  2,749,796  in SS TECH on August 26, 2024 and sell it today you would lose (449,796) from holding SS TECH or give up 16.36% of portfolio value over 90 days.

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

SS TECH  vs.  Kmw Inc

SS TECH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SS TECH 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 December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Kmw Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SS TECH and Kmw

The main advantage of trading using opposite SS TECH and Kmw positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SS TECH 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 SS TECH 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.