Correlation Between KMH Hitech and EBEST Investment

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

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

Diversification Opportunities for KMH Hitech and EBEST Investment

0.87

Correlation Coefficient

KMH Hitech  EBEST Investment

Very poor diversification

The 3 months correlation between KMH and EBEST is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding KMH Hitech Co and EBEST Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EBEST Investment Sec and KMH Hitech 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 KMH Hitech Co are associated (or correlated) with EBEST Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EBEST Investment Sec has no effect on the direction of KMH Hitech i.e., KMH Hitech and EBEST Investment go up and down completely randomly.

Pair Corralation between KMH Hitech and EBEST Investment

Assuming the 90 days trading horizon KMH Hitech Co is expected to under-perform the EBEST Investment. But the stock apears to be less risky and, when comparing its historical volatility, KMH Hitech Co is 1.05 times less risky than EBEST Investment. The stock trades about -0.01 of its potential returns per unit of risk. The EBEST Investment Securities is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  374,826  in EBEST Investment Securities on April 24, 2025 and sell it today you would earn a total of  178,174  from holding EBEST Investment Securities or generate 47.54% return on investment over 90 days.

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

KMH Hitech Co  vs.  EBEST Investment Securities

KMH Hitech

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KMH Hitech Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KMH Hitech may actually be approaching a critical reversion point that can send shares even higher in August 2025.

EBEST Investment Sec

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EBEST Investment Securities are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, EBEST Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KMH Hitech and EBEST Investment

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

The idea behind KMH Hitech Co and EBEST Investment Securities 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.