Correlation Between Alumil Aluminium and KENNAMETAL INC
Can any of the company-specific risk be diversified away by investing in both Alumil Aluminium 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 Alumil Aluminium and KENNAMETAL INC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alumil Aluminium Industry and KENNAMETAL INC, you can compare the effects of market volatilities on Alumil Aluminium 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 Alumil Aluminium with a short position of KENNAMETAL INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alumil Aluminium and KENNAMETAL INC.
Diversification Opportunities for Alumil Aluminium and KENNAMETAL INC
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alumil and KENNAMETAL is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Alumil Aluminium Industry and KENNAMETAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENNAMETAL INC and Alumil Aluminium 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 Alumil Aluminium Industry 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 Alumil Aluminium i.e., Alumil Aluminium and KENNAMETAL INC go up and down completely randomly.
Pair Corralation between Alumil Aluminium and KENNAMETAL INC
Assuming the 90 days horizon Alumil Aluminium Industry is expected to generate 0.51 times more return on investment than KENNAMETAL INC. However, Alumil Aluminium Industry is 1.97 times less risky than KENNAMETAL INC. It trades about 0.43 of its potential returns per unit of risk. KENNAMETAL INC is currently generating about 0.21 per unit of risk. If you would invest 321.00 in Alumil Aluminium Industry on September 5, 2024 and sell it today you would earn a total of 71.00 from holding Alumil Aluminium Industry or generate 22.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alumil Aluminium Industry vs. KENNAMETAL INC
Performance |
| Timeline |
| Alumil Aluminium Industry |
| KENNAMETAL INC |
Alumil Aluminium and KENNAMETAL INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alumil Aluminium and KENNAMETAL INC
The main advantage of trading using opposite Alumil Aluminium and KENNAMETAL INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alumil Aluminium 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.| Alumil Aluminium vs. KENNAMETAL INC | Alumil Aluminium vs. Jacquet Metal Service | Alumil Aluminium vs. Zijin Mining Group | Alumil Aluminium vs. INFORMATION SVC GRP |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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