Correlation Between KENNAMETAL INC and Chuangs China
Can any of the company-specific risk be diversified away by investing in both KENNAMETAL INC and Chuangs China 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 Chuangs China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KENNAMETAL INC and Chuangs China Investments, you can compare the effects of market volatilities on KENNAMETAL INC and Chuangs China 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 Chuangs China. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENNAMETAL INC and Chuangs China.
Diversification Opportunities for KENNAMETAL INC and Chuangs China
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between KENNAMETAL and Chuangs is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding KENNAMETAL INC and Chuangs China Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chuangs China Investments 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 Chuangs China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chuangs China Investments has no effect on the direction of KENNAMETAL INC i.e., KENNAMETAL INC and Chuangs China go up and down completely randomly.
Pair Corralation between KENNAMETAL INC and Chuangs China
Assuming the 90 days trading horizon KENNAMETAL INC is expected to generate 0.33 times more return on investment than Chuangs China. However, KENNAMETAL INC is 2.99 times less risky than Chuangs China. It trades about 0.04 of its potential returns per unit of risk. Chuangs China Investments is currently generating about -0.01 per unit of risk. If you would invest 2,261 in KENNAMETAL INC on August 29, 2024 and sell it today you would earn a total of 519.00 from holding KENNAMETAL INC or generate 22.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KENNAMETAL INC vs. Chuangs China Investments
Performance |
| Timeline |
| KENNAMETAL INC |
| Chuangs China Investments |
KENNAMETAL INC and Chuangs China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KENNAMETAL INC and Chuangs China
The main advantage of trading using opposite KENNAMETAL INC and Chuangs China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENNAMETAL INC position performs unexpectedly, Chuangs China 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 Chuangs China will offset losses from the drop in Chuangs China's long position.| KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Microsoft | KENNAMETAL INC vs. Microsoft |
| Chuangs China vs. Superior Plus Corp | Chuangs China vs. NMI Holdings | Chuangs China vs. Origin Agritech | Chuangs China 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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