Correlation Between ADRIATIC METALS and KENNAMETAL INC
Can any of the company-specific risk be diversified away by investing in both ADRIATIC METALS and KENNAMETAL INC 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 ADRIATIC METALS and KENNAMETAL INC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADRIATIC METALS LS 013355 and KENNAMETAL INC, you can compare the effects of market volatilities on ADRIATIC METALS and KENNAMETAL INC 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 ADRIATIC METALS with a short position of KENNAMETAL INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADRIATIC METALS and KENNAMETAL INC.
Diversification Opportunities for ADRIATIC METALS and KENNAMETAL INC
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ADRIATIC and KENNAMETAL is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding ADRIATIC METALS LS 013355 and KENNAMETAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENNAMETAL INC and ADRIATIC METALS 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 ADRIATIC METALS LS 013355 are associated (or correlated) with KENNAMETAL INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENNAMETAL INC has no effect on the direction of ADRIATIC METALS i.e., ADRIATIC METALS and KENNAMETAL INC go up and down completely randomly.
Pair Corralation between ADRIATIC METALS and KENNAMETAL INC
Assuming the 90 days trading horizon ADRIATIC METALS LS 013355 is expected to under-perform the KENNAMETAL INC. But the stock apears to be less risky and, when comparing its historical volatility, ADRIATIC METALS LS 013355 is 1.35 times less risky than KENNAMETAL INC. The stock trades about -0.05 of its potential returns per unit of risk. The KENNAMETAL INC is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,283 in KENNAMETAL INC on August 28, 2024 and sell it today you would earn a total of 477.00 from holding KENNAMETAL INC or generate 20.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADRIATIC METALS LS 013355 vs. KENNAMETAL INC
Performance |
| Timeline |
| ADRIATIC METALS LS |
| KENNAMETAL INC |
ADRIATIC METALS and KENNAMETAL INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADRIATIC METALS and KENNAMETAL INC
The main advantage of trading using opposite ADRIATIC METALS and KENNAMETAL INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADRIATIC METALS position performs unexpectedly, KENNAMETAL INC 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 KENNAMETAL INC will offset losses from the drop in KENNAMETAL INC's long position.| ADRIATIC METALS vs. Superior Plus Corp | ADRIATIC METALS vs. NMI Holdings | ADRIATIC METALS vs. Origin Agritech | ADRIATIC METALS vs. SIVERS SEMICONDUCTORS AB |
| KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Microsoft |
Check out your portfolio center.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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