Correlation Between KENNAMETAL INC and Zijin Mining
Can any of the company-specific risk be diversified away by investing in both KENNAMETAL INC and Zijin Mining 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 Zijin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KENNAMETAL INC and Zijin Mining Group, you can compare the effects of market volatilities on KENNAMETAL INC and Zijin Mining 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 Zijin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENNAMETAL INC and Zijin Mining.
Diversification Opportunities for KENNAMETAL INC and Zijin Mining
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between KENNAMETAL and Zijin is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding KENNAMETAL INC and Zijin Mining Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zijin Mining Group 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 Zijin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zijin Mining Group has no effect on the direction of KENNAMETAL INC i.e., KENNAMETAL INC and Zijin Mining go up and down completely randomly.
Pair Corralation between KENNAMETAL INC and Zijin Mining
Assuming the 90 days trading horizon KENNAMETAL INC is expected to generate 4.16 times less return on investment than Zijin Mining. But when comparing it to its historical volatility, KENNAMETAL INC is 1.76 times less risky than Zijin Mining. It trades about 0.02 of its potential returns per unit of risk. Zijin Mining Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 111.00 in Zijin Mining Group on August 28, 2024 and sell it today you would earn a total of 70.00 from holding Zijin Mining Group or generate 63.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
KENNAMETAL INC vs. Zijin Mining Group
Performance |
| Timeline |
| KENNAMETAL INC |
| Zijin Mining Group |
KENNAMETAL INC and Zijin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KENNAMETAL INC and Zijin Mining
The main advantage of trading using opposite KENNAMETAL INC and Zijin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENNAMETAL INC position performs unexpectedly, Zijin Mining 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 Zijin Mining will offset losses from the drop in Zijin Mining'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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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