Correlation Between Apple and KENNAMETAL INC

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

By analyzing existing cross correlation between Apple Inc and KENNAMETAL INC, you can compare the effects of market volatilities on Apple 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 Apple with a short position of KENNAMETAL INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and KENNAMETAL INC.

Diversification Opportunities for Apple and KENNAMETAL INC

0.67

Correlation Coefficient

Apple  KENNAMETAL INC

Poor diversification

The 3 months correlation between Apple and KENNAMETAL is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and KENNAMETAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENNAMETAL INC and Apple 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 Apple Inc 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 Apple i.e., Apple and KENNAMETAL INC go up and down completely randomly.

Pair Corralation between Apple and KENNAMETAL INC

Assuming the 90 days trading horizon Apple Inc is expected to under-perform the KENNAMETAL INC. In addition to that, Apple is 1.22 times more volatile than KENNAMETAL INC. It trades about -0.15 of its total potential returns per unit of risk. KENNAMETAL INC is currently generating about -0.16 per unit of volatility. If you would invest  2,319  in KENNAMETAL INC on December 25, 2024 and sell it today you would lose (339.00) from holding KENNAMETAL INC or give up 14.62% of portfolio value over 90 days.

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

Apple Inc  vs.  KENNAMETAL INC

Apple Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

KENNAMETAL INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days KENNAMETAL INC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Apple and KENNAMETAL INC

The main advantage of trading using opposite Apple and KENNAMETAL INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.

The idea behind Apple Inc and KENNAMETAL INC 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.