Correlation Between Amulaire Thermal and Kenmec Mechanical

Can any of the company-specific risk be diversified away by investing in both Amulaire Thermal and Kenmec Mechanical 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 Amulaire Thermal and Kenmec Mechanical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amulaire Thermal Technology and Kenmec Mechanical Engineering, you can compare the effects of market volatilities on Amulaire Thermal and Kenmec Mechanical 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 Amulaire Thermal with a short position of Kenmec Mechanical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amulaire Thermal and Kenmec Mechanical.

Diversification Opportunities for Amulaire Thermal and Kenmec Mechanical

0.36

Correlation Coefficient

Amulaire Thermal  Kenmec Mechanical

Weak diversification

The 3 months correlation between Amulaire and Kenmec is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Amulaire Thermal Technology and Kenmec Mechanical Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenmec Mechanical and Amulaire Thermal 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 Amulaire Thermal Technology are associated (or correlated) with Kenmec Mechanical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenmec Mechanical has no effect on the direction of Amulaire Thermal i.e., Amulaire Thermal and Kenmec Mechanical go up and down completely randomly.

Pair Corralation between Amulaire Thermal and Kenmec Mechanical

Assuming the 90 days trading horizon Amulaire Thermal Technology is expected to generate 1.12 times more return on investment than Kenmec Mechanical. However, Amulaire Thermal is 1.12 times more volatile than Kenmec Mechanical Engineering. It trades about 0.06 of its potential returns per unit of risk. Kenmec Mechanical Engineering is currently generating about 0.02 per unit of risk. If you would invest  2,750  in Amulaire Thermal Technology on October 23, 2024 and sell it today you would earn a total of  80.00  from holding Amulaire Thermal Technology or generate 2.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Amulaire Thermal Technology  vs.  Kenmec Mechanical Engineering

Amulaire Thermal Tec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amulaire Thermal Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Kenmec Mechanical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kenmec Mechanical Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Amulaire Thermal and Kenmec Mechanical

The main advantage of trading using opposite Amulaire Thermal and Kenmec Mechanical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amulaire Thermal position performs unexpectedly, Kenmec Mechanical 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 Kenmec Mechanical will offset losses from the drop in Kenmec Mechanical's long position.

The idea behind Amulaire Thermal Technology and Kenmec Mechanical Engineering pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.