Correlation Between AVY Precision and Kenmec Mechanical
Can any of the company-specific risk be diversified away by investing in both AVY Precision 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 AVY Precision and Kenmec Mechanical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVY Precision Technology and Kenmec Mechanical Engineering, you can compare the effects of market volatilities on AVY Precision 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 AVY Precision with a short position of Kenmec Mechanical. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVY Precision and Kenmec Mechanical.
Diversification Opportunities for AVY Precision and Kenmec Mechanical
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AVY and Kenmec is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding AVY Precision Technology and Kenmec Mechanical Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenmec Mechanical and AVY Precision 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 AVY Precision Technology 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 AVY Precision i.e., AVY Precision and Kenmec Mechanical go up and down completely randomly.
Pair Corralation between AVY Precision and Kenmec Mechanical
Assuming the 90 days trading horizon AVY Precision Technology is expected to under-perform the Kenmec Mechanical. But the stock apears to be less risky and, when comparing its historical volatility, AVY Precision Technology is 1.39 times less risky than Kenmec Mechanical. The stock trades about -0.18 of its potential returns per unit of risk. The Kenmec Mechanical Engineering is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 8,760 in Kenmec Mechanical Engineering on September 4, 2024 and sell it today you would lose (250.00) from holding Kenmec Mechanical Engineering or give up 2.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AVY Precision Technology vs. Kenmec Mechanical Engineering
Performance |
| Timeline |
| AVY Precision Technology |
| Kenmec Mechanical |
AVY Precision and Kenmec Mechanical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVY Precision and Kenmec Mechanical
The main advantage of trading using opposite AVY Precision and Kenmec Mechanical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVY Precision 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.| AVY Precision vs. Ability Enterprise Co | AVY Precision vs. XAC Automation | AVY Precision vs. Cheng Fwa Industrial | AVY Precision vs. Kaulin Mfg |
| Kenmec Mechanical vs. Prime Oil Chemical | Kenmec Mechanical vs. Great Computer | Kenmec Mechanical vs. Grand Pacific Petrochemical | Kenmec Mechanical vs. Ho Tung Chemical |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |