Correlation Between Kolon Plastics and KMH Hitech

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

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

Diversification Opportunities for Kolon Plastics and KMH Hitech

0.84

Correlation Coefficient

Kolon Plastics  KMH Hitech

Very poor diversification

The 3 months correlation between Kolon and KMH is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Kolon Plastics and KMH Hitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KMH Hitech and Kolon Plastics 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 Kolon Plastics are associated (or correlated) with KMH Hitech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KMH Hitech has no effect on the direction of Kolon Plastics i.e., Kolon Plastics and KMH Hitech go up and down completely randomly.

Pair Corralation between Kolon Plastics and KMH Hitech

Assuming the 90 days trading horizon Kolon Plastics is expected to generate 1.29 times more return on investment than KMH Hitech. However, Kolon Plastics is 1.29 times more volatile than KMH Hitech Co. It trades about 0.1 of its potential returns per unit of risk. KMH Hitech Co is currently generating about 0.12 per unit of risk. If you would invest  632,000  in Kolon Plastics on April 25, 2025 and sell it today you would earn a total of  56,000  from holding Kolon Plastics or generate 8.86% return on investment over 90 days.

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

Kolon Plastics  vs.  KMH Hitech Co

Kolon Plastics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kolon Plastics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kolon Plastics may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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.

Pair Trading with Kolon Plastics and KMH Hitech

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

The idea behind Kolon Plastics and KMH Hitech 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.