Correlation Between Nippon Steel and KENNAMETAL INC
Can any of the company-specific risk be diversified away by investing in both Nippon Steel and KENNAMETAL INC 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 Nippon Steel and KENNAMETAL INC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nippon Steel and KENNAMETAL INC, you can compare the effects of market volatilities on Nippon Steel and KENNAMETAL INC 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 Nippon Steel with a short position of KENNAMETAL INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nippon Steel and KENNAMETAL INC.
Diversification Opportunities for Nippon Steel and KENNAMETAL INC
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nippon and KENNAMETAL is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Steel and KENNAMETAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENNAMETAL INC and Nippon Steel 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 Nippon Steel are associated (or correlated) with KENNAMETAL INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENNAMETAL INC has no effect on the direction of Nippon Steel i.e., Nippon Steel and KENNAMETAL INC go up and down completely randomly.
Pair Corralation between Nippon Steel and KENNAMETAL INC
Assuming the 90 days trading horizon Nippon Steel is expected to generate 1.62 times less return on investment than KENNAMETAL INC. But when comparing it to its historical volatility, Nippon Steel is 1.05 times less risky than KENNAMETAL INC. It trades about 0.01 of its potential returns per unit of risk. KENNAMETAL INC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,547 in KENNAMETAL INC on August 31, 2024 and sell it today you would earn a total of 133.00 from holding KENNAMETAL INC or generate 5.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nippon Steel vs. KENNAMETAL INC
Performance |
| Timeline |
| Nippon Steel |
| KENNAMETAL INC |
Nippon Steel and KENNAMETAL INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nippon Steel and KENNAMETAL INC
The main advantage of trading using opposite Nippon Steel and KENNAMETAL INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nippon Steel position performs unexpectedly, KENNAMETAL INC 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 KENNAMETAL INC will offset losses from the drop in KENNAMETAL INC's long position.| Nippon Steel vs. SIVERS SEMICONDUCTORS AB | Nippon Steel vs. Darden Restaurants | Nippon Steel vs. Reliance Steel Aluminum | Nippon Steel vs. Q2M Managementberatung AG |
| KENNAMETAL INC vs. Siamgas And Petrochemicals | KENNAMETAL INC vs. CVS Health | KENNAMETAL INC vs. AIR PRODCHEMICALS | KENNAMETAL INC vs. RYU Apparel |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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