Correlation Between KENNAMETAL INC and ADRIATIC METALS
Can any of the company-specific risk be diversified away by investing in both KENNAMETAL INC and ADRIATIC METALS 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 KENNAMETAL INC and ADRIATIC METALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KENNAMETAL INC and ADRIATIC METALS LS 013355, you can compare the effects of market volatilities on KENNAMETAL INC and ADRIATIC METALS 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 KENNAMETAL INC with a short position of ADRIATIC METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENNAMETAL INC and ADRIATIC METALS.
Diversification Opportunities for KENNAMETAL INC and ADRIATIC METALS
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KENNAMETAL and ADRIATIC is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding KENNAMETAL INC and ADRIATIC METALS LS 013355 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADRIATIC METALS LS and KENNAMETAL INC 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 KENNAMETAL INC are associated (or correlated) with ADRIATIC METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADRIATIC METALS LS has no effect on the direction of KENNAMETAL INC i.e., KENNAMETAL INC and ADRIATIC METALS go up and down completely randomly.
Pair Corralation between KENNAMETAL INC and ADRIATIC METALS
Assuming the 90 days trading horizon KENNAMETAL INC is expected to generate 1.35 times more return on investment than ADRIATIC METALS. However, KENNAMETAL INC is 1.35 times more volatile than ADRIATIC METALS LS 013355. It trades about 0.23 of its potential returns per unit of risk. ADRIATIC METALS LS 013355 is currently generating about -0.05 per unit of risk. If you would invest 2,283 in KENNAMETAL INC on August 28, 2024 and sell it today you would earn a total of 477.00 from holding KENNAMETAL INC or generate 20.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KENNAMETAL INC vs. ADRIATIC METALS LS 013355
Performance |
| Timeline |
| KENNAMETAL INC |
| ADRIATIC METALS LS |
KENNAMETAL INC and ADRIATIC METALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KENNAMETAL INC and ADRIATIC METALS
The main advantage of trading using opposite KENNAMETAL INC and ADRIATIC METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENNAMETAL INC position performs unexpectedly, ADRIATIC METALS 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 ADRIATIC METALS will offset losses from the drop in ADRIATIC METALS's long position.| KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Microsoft |
| ADRIATIC METALS vs. Superior Plus Corp | ADRIATIC METALS vs. NMI Holdings | ADRIATIC METALS vs. Origin Agritech | ADRIATIC METALS vs. SIVERS SEMICONDUCTORS AB |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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