Correlation Between BYD ELECTRONIC and KENNAMETAL INC
Can any of the company-specific risk be diversified away by investing in both BYD ELECTRONIC 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 BYD ELECTRONIC and KENNAMETAL INC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BYD ELECTRONIC and KENNAMETAL INC, you can compare the effects of market volatilities on BYD ELECTRONIC 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 BYD ELECTRONIC with a short position of KENNAMETAL INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD ELECTRONIC and KENNAMETAL INC.
Diversification Opportunities for BYD ELECTRONIC and KENNAMETAL INC
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between BYD and KENNAMETAL is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding BYD ELECTRONIC and KENNAMETAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENNAMETAL INC and BYD ELECTRONIC 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 BYD ELECTRONIC 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 BYD ELECTRONIC i.e., BYD ELECTRONIC and KENNAMETAL INC go up and down completely randomly.
Pair Corralation between BYD ELECTRONIC and KENNAMETAL INC
Assuming the 90 days trading horizon BYD ELECTRONIC is expected to generate 3.96 times less return on investment than KENNAMETAL INC. In addition to that, BYD ELECTRONIC is 1.24 times more volatile than KENNAMETAL INC. It trades about 0.05 of its total potential returns per unit of risk. KENNAMETAL INC is currently generating about 0.23 per unit of volatility. 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BYD ELECTRONIC vs. KENNAMETAL INC
Performance |
| Timeline |
| BYD ELECTRONIC |
| KENNAMETAL INC |
BYD ELECTRONIC and KENNAMETAL INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD ELECTRONIC and KENNAMETAL INC
The main advantage of trading using opposite BYD ELECTRONIC and KENNAMETAL INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD ELECTRONIC 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.| BYD ELECTRONIC vs. LG Display Co | BYD ELECTRONIC vs. KRISPY KREME DL 01 | BYD ELECTRONIC vs. Jacquet Metal Service | BYD ELECTRONIC vs. Entravision Communications |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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