Correlation Between Kenmec Mechanical and Singatron Enterprise

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

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

Diversification Opportunities for Kenmec Mechanical and Singatron Enterprise

0.14

Correlation Coefficient

Kenmec Mechanical  Singatron Enterprise

Average diversification

The 3 months correlation between Kenmec and Singatron is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Kenmec Mechanical Engineering and Singatron Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singatron Enterprise and Kenmec Mechanical 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 Kenmec Mechanical Engineering are associated (or correlated) with Singatron Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singatron Enterprise has no effect on the direction of Kenmec Mechanical i.e., Kenmec Mechanical and Singatron Enterprise go up and down completely randomly.

Pair Corralation between Kenmec Mechanical and Singatron Enterprise

Assuming the 90 days trading horizon Kenmec Mechanical Engineering is expected to under-perform the Singatron Enterprise. But the stock apears to be less risky and, when comparing its historical volatility, Kenmec Mechanical Engineering is 1.5 times less risky than Singatron Enterprise. The stock trades about -0.03 of its potential returns per unit of risk. The Singatron Enterprise Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,000  in Singatron Enterprise Co on September 14, 2024 and sell it today you would lose (5.00) from holding Singatron Enterprise Co or give up 0.17% of portfolio value over 90 days.

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

Kenmec Mechanical Engineering  vs.  Singatron Enterprise Co

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 fairly stable basic indicators, Kenmec Mechanical is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Singatron Enterprise

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Singatron Enterprise Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Singatron Enterprise is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Kenmec Mechanical and Singatron Enterprise

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

The idea behind Kenmec Mechanical Engineering and Singatron Enterprise Co 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..