Correlation Between Columbus McKinnon and Komatsu
Can any of the company-specific risk be diversified away by investing in both Columbus McKinnon and Komatsu 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 Columbus McKinnon and Komatsu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbus McKinnon and Komatsu, you can compare the effects of market volatilities on Columbus McKinnon and Komatsu 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 Columbus McKinnon with a short position of Komatsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbus McKinnon and Komatsu.
Diversification Opportunities for Columbus McKinnon and Komatsu
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Columbus and Komatsu is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Columbus McKinnon and Komatsu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Komatsu and Columbus McKinnon 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 Columbus McKinnon are associated (or correlated) with Komatsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Komatsu has no effect on the direction of Columbus McKinnon i.e., Columbus McKinnon and Komatsu go up and down completely randomly.
Pair Corralation between Columbus McKinnon and Komatsu
Given the investment horizon of 90 days Columbus McKinnon is expected to generate 2.03 times more return on investment than Komatsu. However, Columbus McKinnon is 2.03 times more volatile than Komatsu. It trades about 0.3 of its potential returns per unit of risk. Komatsu is currently generating about 0.08 per unit of risk. If you would invest 3,283 in Columbus McKinnon on August 27, 2024 and sell it today you would earn a total of 570.00 from holding Columbus McKinnon or generate 17.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbus McKinnon vs. Komatsu
Performance |
| Timeline |
| Columbus McKinnon |
| Komatsu |
Columbus McKinnon and Komatsu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbus McKinnon and Komatsu
The main advantage of trading using opposite Columbus McKinnon and Komatsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbus McKinnon position performs unexpectedly, Komatsu 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 Komatsu will offset losses from the drop in Komatsu's long position.| Columbus McKinnon vs. Lindsay | Columbus McKinnon vs. Astec Industries | Columbus McKinnon vs. Shyft Group | Columbus McKinnon vs. AGCO Corporation |
| Komatsu vs. Alamo Group | Komatsu vs. Kubota | Komatsu vs. Hitachi Construction Machinery | Komatsu vs. Komatsu |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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