Correlation Between Husqvarna and Kennametal
Can any of the company-specific risk be diversified away by investing in both Husqvarna and Kennametal 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 Husqvarna and Kennametal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Husqvarna AB and Kennametal, you can compare the effects of market volatilities on Husqvarna and Kennametal 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 Husqvarna with a short position of Kennametal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Husqvarna and Kennametal.
Diversification Opportunities for Husqvarna and Kennametal
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Husqvarna and Kennametal is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Husqvarna AB and Kennametal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kennametal and Husqvarna 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 Husqvarna AB are associated (or correlated) with Kennametal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kennametal has no effect on the direction of Husqvarna i.e., Husqvarna and Kennametal go up and down completely randomly.
Pair Corralation between Husqvarna and Kennametal
Assuming the 90 days horizon Husqvarna AB is expected to under-perform the Kennametal. In addition to that, Husqvarna is 1.07 times more volatile than Kennametal. It trades about -0.06 of its total potential returns per unit of risk. Kennametal is currently generating about 0.06 per unit of volatility. If you would invest 2,377 in Kennametal on August 28, 2024 and sell it today you would earn a total of 563.00 from holding Kennametal or generate 23.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.52% |
| Values | Daily Returns |
Husqvarna AB vs. Kennametal
Performance |
| Timeline |
| Husqvarna AB |
| Kennametal |
Husqvarna and Kennametal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Husqvarna and Kennametal
The main advantage of trading using opposite Husqvarna and Kennametal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Husqvarna position performs unexpectedly, Kennametal 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 will offset losses from the drop in Kennametal's long position.| Husqvarna vs. SMC Corp Japan | Husqvarna vs. Hong Kong Exchange | Husqvarna vs. AIA Group Ltd | Husqvarna vs. Techtronic Industries |
| Kennametal vs. Hillman Solutions Corp | Kennametal vs. AB SKF | Kennametal vs. Lincoln Electric Holdings | Kennametal vs. Toro Co |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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