Correlation Between Daxin Materials and Kenmec Mechanical
Can any of the company-specific risk be diversified away by investing in both Daxin Materials 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 Daxin Materials and Kenmec Mechanical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daxin Materials Corp and Kenmec Mechanical Engineering, you can compare the effects of market volatilities on Daxin Materials 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 Daxin Materials with a short position of Kenmec Mechanical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daxin Materials and Kenmec Mechanical.
Diversification Opportunities for Daxin Materials and Kenmec Mechanical
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daxin and Kenmec is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Daxin Materials Corp and Kenmec Mechanical Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenmec Mechanical and Daxin Materials 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 Daxin Materials Corp 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 Daxin Materials i.e., Daxin Materials and Kenmec Mechanical go up and down completely randomly.
Pair Corralation between Daxin Materials and Kenmec Mechanical
Assuming the 90 days trading horizon Daxin Materials Corp is expected to under-perform the Kenmec Mechanical. In addition to that, Daxin Materials is 1.69 times more volatile than Kenmec Mechanical Engineering. It trades about -0.11 of its total potential returns per unit of risk. Kenmec Mechanical Engineering is currently generating about 0.05 per unit of volatility. If you would invest 8,310 in Kenmec Mechanical Engineering on September 15, 2024 and sell it today you would earn a total of 150.00 from holding Kenmec Mechanical Engineering or generate 1.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daxin Materials Corp vs. Kenmec Mechanical Engineering
Performance |
| Timeline |
| Daxin Materials Corp |
| Kenmec Mechanical |
Daxin Materials and Kenmec Mechanical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daxin Materials and Kenmec Mechanical
The main advantage of trading using opposite Daxin Materials and Kenmec Mechanical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daxin Materials 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.| Daxin Materials vs. Topco Scientific Co | Daxin Materials vs. Holtek Semiconductor | Daxin Materials vs. Greatek Electronics | Daxin Materials vs. Stark Technology |
| Kenmec Mechanical vs. Feng Hsin Steel | Kenmec Mechanical vs. Insyde Software | Kenmec Mechanical vs. Emerging Display Technologies | Kenmec Mechanical vs. Ever Clear Environmental Eng |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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