Correlation Between CNVISION MEDIA and KENNAMETAL INC

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

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

Diversification Opportunities for CNVISION MEDIA and KENNAMETAL INC

-0.54

Correlation Coefficient

CNVISION MEDIA  KENNAMETAL INC

Excellent diversification

The 3 months correlation between CNVISION and KENNAMETAL is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding CNVISION MEDIA and KENNAMETAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENNAMETAL INC and CNVISION MEDIA 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 CNVISION MEDIA 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 CNVISION MEDIA i.e., CNVISION MEDIA and KENNAMETAL INC go up and down completely randomly.

Pair Corralation between CNVISION MEDIA and KENNAMETAL INC

Assuming the 90 days trading horizon CNVISION MEDIA is expected to generate 2.04 times more return on investment than KENNAMETAL INC. However, CNVISION MEDIA is 2.04 times more volatile than KENNAMETAL INC. It trades about 0.05 of its potential returns per unit of risk. KENNAMETAL INC is currently generating about -0.16 per unit of risk. If you would invest  5.70  in CNVISION MEDIA on December 24, 2024 and sell it today you would earn a total of  0.40  from holding CNVISION MEDIA or generate 7.02% return on investment over 90 days.

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

CNVISION MEDIA  vs.  KENNAMETAL INC

CNVISION MEDIA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CNVISION MEDIA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, CNVISION MEDIA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 CNVISION MEDIA and KENNAMETAL INC

The main advantage of trading using opposite CNVISION MEDIA and KENNAMETAL INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNVISION MEDIA 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 CNVISION MEDIA 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.