Correlation Between Kenmec Mechanical and Prime Oil
Can any of the company-specific risk be diversified away by investing in both Kenmec Mechanical and Prime Oil 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 Kenmec Mechanical and Prime Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kenmec Mechanical Engineering and Prime Oil Chemical, you can compare the effects of market volatilities on Kenmec Mechanical and Prime Oil 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 Kenmec Mechanical with a short position of Prime Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kenmec Mechanical and Prime Oil.
Diversification Opportunities for Kenmec Mechanical and Prime Oil
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kenmec and Prime is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Kenmec Mechanical Engineering and Prime Oil Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Oil Chemical and Kenmec Mechanical 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 Kenmec Mechanical Engineering are associated (or correlated) with Prime Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Oil Chemical has no effect on the direction of Kenmec Mechanical i.e., Kenmec Mechanical and Prime Oil go up and down completely randomly.
Pair Corralation between Kenmec Mechanical and Prime Oil
Assuming the 90 days trading horizon Kenmec Mechanical Engineering is expected to generate 5.8 times more return on investment than Prime Oil. However, Kenmec Mechanical is 5.8 times more volatile than Prime Oil Chemical. It trades about 0.02 of its potential returns per unit of risk. Prime Oil Chemical is currently generating about -0.03 per unit of risk. If you would invest 7,950 in Kenmec Mechanical Engineering on September 12, 2024 and sell it today you would earn a total of 450.00 from holding Kenmec Mechanical Engineering or generate 5.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kenmec Mechanical Engineering vs. Prime Oil Chemical
Performance |
| Timeline |
| Kenmec Mechanical |
| Prime Oil Chemical |
Kenmec Mechanical and Prime Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kenmec Mechanical and Prime Oil
The main advantage of trading using opposite Kenmec Mechanical and Prime Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kenmec Mechanical position performs unexpectedly, Prime Oil 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 Prime Oil will offset losses from the drop in Prime Oil's long position.| Kenmec Mechanical vs. U Tech Media Corp | Kenmec Mechanical vs. Wei Chuan Foods | Kenmec Mechanical vs. Cowealth Medical Holding | Kenmec Mechanical vs. Gamania Digital Entertainment |
| Prime Oil vs. President Chain Store | Prime Oil vs. Huaku Development Co | Prime Oil vs. Formosa International Hotels | Prime Oil vs. Taiwan Fu Hsing |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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