Correlation Between KENNAMETAL INC and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both KENNAMETAL INC and LPKF Laser 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 LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KENNAMETAL INC and LPKF Laser Electronics, you can compare the effects of market volatilities on KENNAMETAL INC and LPKF Laser 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 LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENNAMETAL INC and LPKF Laser.
Diversification Opportunities for KENNAMETAL INC and LPKF Laser
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between KENNAMETAL and LPKF is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding KENNAMETAL INC and LPKF Laser Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPKF Laser Electronics 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 LPKF Laser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPKF Laser Electronics has no effect on the direction of KENNAMETAL INC i.e., KENNAMETAL INC and LPKF Laser go up and down completely randomly.
Pair Corralation between KENNAMETAL INC and LPKF Laser
Assuming the 90 days trading horizon KENNAMETAL INC is expected to generate 4.17 times more return on investment than LPKF Laser. However, KENNAMETAL INC is 4.17 times more volatile than LPKF Laser Electronics. It trades about 0.17 of its potential returns per unit of risk. LPKF Laser Electronics is currently generating about -0.2 per unit of risk. If you would invest 2,343 in KENNAMETAL INC on August 30, 2024 and sell it today you would earn a total of 357.00 from holding KENNAMETAL INC or generate 15.24% 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. LPKF Laser Electronics
Performance |
| Timeline |
| KENNAMETAL INC |
| LPKF Laser Electronics |
KENNAMETAL INC and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KENNAMETAL INC and LPKF Laser
The main advantage of trading using opposite KENNAMETAL INC and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENNAMETAL INC position performs unexpectedly, LPKF Laser 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 LPKF Laser will offset losses from the drop in LPKF Laser's long position.| KENNAMETAL INC vs. China Datang | KENNAMETAL INC vs. QUEEN S ROAD | KENNAMETAL INC vs. GOLD ROAD RES | KENNAMETAL INC vs. TERADATA |
| LPKF Laser vs. ABB | LPKF Laser vs. Superior Plus Corp | LPKF Laser vs. NMI Holdings | LPKF Laser 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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