Correlation Between KENNAMETAL INC and Daito Trust
Can any of the company-specific risk be diversified away by investing in both KENNAMETAL INC and Daito Trust 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 Daito Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KENNAMETAL INC and Daito Trust Construction, you can compare the effects of market volatilities on KENNAMETAL INC and Daito Trust 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 Daito Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENNAMETAL INC and Daito Trust.
Diversification Opportunities for KENNAMETAL INC and Daito Trust
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KENNAMETAL and Daito is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding KENNAMETAL INC and Daito Trust Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daito Trust Construction 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 Daito Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daito Trust Construction has no effect on the direction of KENNAMETAL INC i.e., KENNAMETAL INC and Daito Trust go up and down completely randomly.
Pair Corralation between KENNAMETAL INC and Daito Trust
Assuming the 90 days trading horizon KENNAMETAL INC is expected to generate 2.96 times more return on investment than Daito Trust. However, KENNAMETAL INC is 2.96 times more volatile than Daito Trust Construction. It trades about 0.2 of its potential returns per unit of risk. Daito Trust Construction is currently generating about 0.14 per unit of risk. If you would invest 2,303 in KENNAMETAL INC on September 4, 2024 and sell it today you would earn a total of 417.00 from holding KENNAMETAL INC or generate 18.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
KENNAMETAL INC vs. Daito Trust Construction
Performance |
| Timeline |
| KENNAMETAL INC |
| Daito Trust Construction |
KENNAMETAL INC and Daito Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KENNAMETAL INC and Daito Trust
The main advantage of trading using opposite KENNAMETAL INC and Daito Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENNAMETAL INC position performs unexpectedly, Daito Trust 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 Daito Trust will offset losses from the drop in Daito Trust's long position.| KENNAMETAL INC vs. TOTAL GABON | KENNAMETAL INC vs. Walgreens Boots Alliance | KENNAMETAL INC vs. Peak Resources Limited |
| Daito Trust vs. COSTAR GROUP INC | Daito Trust vs. CBRE Group Class | Daito Trust vs. Vonovia SE | Daito Trust vs. Vonovia SE |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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