Correlation Between Kenmec Mechanical and AVY Precision
Can any of the company-specific risk be diversified away by investing in both Kenmec Mechanical and AVY Precision 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 AVY Precision 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 AVY Precision Technology, you can compare the effects of market volatilities on Kenmec Mechanical and AVY Precision 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 AVY Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kenmec Mechanical and AVY Precision.
Diversification Opportunities for Kenmec Mechanical and AVY Precision
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kenmec and AVY is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Kenmec Mechanical Engineering and AVY Precision Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVY Precision Technology 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 AVY Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVY Precision Technology has no effect on the direction of Kenmec Mechanical i.e., Kenmec Mechanical and AVY Precision go up and down completely randomly.
Pair Corralation between Kenmec Mechanical and AVY Precision
Assuming the 90 days trading horizon Kenmec Mechanical Engineering is expected to generate 1.39 times more return on investment than AVY Precision. However, Kenmec Mechanical is 1.39 times more volatile than AVY Precision Technology. It trades about -0.04 of its potential returns per unit of risk. AVY Precision Technology is currently generating about -0.18 per unit of risk. 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 |
Kenmec Mechanical Engineering vs. AVY Precision Technology
Performance |
| Timeline |
| Kenmec Mechanical |
| AVY Precision Technology |
Kenmec Mechanical and AVY Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kenmec Mechanical and AVY Precision
The main advantage of trading using opposite Kenmec Mechanical and AVY Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kenmec Mechanical position performs unexpectedly, AVY Precision 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 AVY Precision will offset losses from the drop in AVY Precision's long position.| Kenmec Mechanical vs. Prime Oil Chemical | Kenmec Mechanical vs. Great Computer | Kenmec Mechanical vs. Grand Pacific Petrochemical | Kenmec Mechanical vs. Ho Tung Chemical |
| AVY Precision vs. Ability Enterprise Co | AVY Precision vs. XAC Automation | AVY Precision vs. Cheng Fwa Industrial | AVY Precision vs. Kaulin Mfg |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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