Correlation Between Global PMX and Kenmec Mechanical
Can any of the company-specific risk be diversified away by investing in both Global PMX and Kenmec Mechanical 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 Global PMX and Kenmec Mechanical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global PMX Co and Kenmec Mechanical Engineering, you can compare the effects of market volatilities on Global PMX and Kenmec Mechanical 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 Global PMX with a short position of Kenmec Mechanical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global PMX and Kenmec Mechanical.
Diversification Opportunities for Global PMX and Kenmec Mechanical
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Global and Kenmec is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Global PMX Co and Kenmec Mechanical Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenmec Mechanical and Global PMX 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 Global PMX Co are associated (or correlated) with Kenmec Mechanical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenmec Mechanical has no effect on the direction of Global PMX i.e., Global PMX and Kenmec Mechanical go up and down completely randomly.
Pair Corralation between Global PMX and Kenmec Mechanical
Assuming the 90 days trading horizon Global PMX Co is expected to under-perform the Kenmec Mechanical. In addition to that, Global PMX is 1.1 times more volatile than Kenmec Mechanical Engineering. It trades about -0.18 of its total potential returns per unit of risk. Kenmec Mechanical Engineering is currently generating about 0.01 per unit of volatility. If you would invest 9,080 in Kenmec Mechanical Engineering on October 15, 2024 and sell it today you would lose (20.00) from holding Kenmec Mechanical Engineering or give up 0.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global PMX Co vs. Kenmec Mechanical Engineering
Performance |
| Timeline |
| Global PMX |
| Kenmec Mechanical |
Global PMX and Kenmec Mechanical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global PMX and Kenmec Mechanical
The main advantage of trading using opposite Global PMX and Kenmec Mechanical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global PMX position performs unexpectedly, Kenmec Mechanical 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 Kenmec Mechanical will offset losses from the drop in Kenmec Mechanical's long position.| Global PMX vs. Hota Industrial Mfg | Global PMX vs. BizLink Holding | Global PMX vs. Tong Hsing Electronic | Global PMX vs. Sinbon Electronics Co |
| Kenmec Mechanical vs. Yuanta Financial Holdings | Kenmec Mechanical vs. Prime Oil Chemical | Kenmec Mechanical vs. Mechema Chemicals Int | Kenmec Mechanical vs. Shinkong Synthetic Fiber |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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