Correlation Between KENNAMETAL INC and Apollo Investment
Can any of the company-specific risk be diversified away by investing in both KENNAMETAL INC and Apollo Investment 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 Apollo Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KENNAMETAL INC and Apollo Investment Corp, you can compare the effects of market volatilities on KENNAMETAL INC and Apollo Investment 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 Apollo Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENNAMETAL INC and Apollo Investment.
Diversification Opportunities for KENNAMETAL INC and Apollo Investment
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KENNAMETAL and Apollo is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding KENNAMETAL INC and Apollo Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Investment Corp 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 Apollo Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Investment Corp has no effect on the direction of KENNAMETAL INC i.e., KENNAMETAL INC and Apollo Investment go up and down completely randomly.
Pair Corralation between KENNAMETAL INC and Apollo Investment
Assuming the 90 days trading horizon KENNAMETAL INC is expected to generate 1.73 times less return on investment than Apollo Investment. In addition to that, KENNAMETAL INC is 1.65 times more volatile than Apollo Investment Corp. It trades about 0.04 of its total potential returns per unit of risk. Apollo Investment Corp is currently generating about 0.1 per unit of volatility. If you would invest 846.00 in Apollo Investment Corp on August 29, 2024 and sell it today you would earn a total of 491.00 from holding Apollo Investment Corp or generate 58.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KENNAMETAL INC vs. Apollo Investment Corp
Performance |
| Timeline |
| KENNAMETAL INC |
| Apollo Investment Corp |
KENNAMETAL INC and Apollo Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KENNAMETAL INC and Apollo Investment
The main advantage of trading using opposite KENNAMETAL INC and Apollo Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENNAMETAL INC position performs unexpectedly, Apollo Investment 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 Apollo Investment will offset losses from the drop in Apollo Investment's long position.| KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Microsoft | KENNAMETAL INC vs. Microsoft |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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