Correlation Between Hurco Companies and Kadant

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

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

Diversification Opportunities for Hurco Companies and Kadant

0.54

Correlation Coefficient

Hurco Companies  Kadant

Very weak diversification

The 3 months correlation between Hurco and Kadant is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Hurco Companies and Kadant Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kadant Inc and Hurco Companies 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 Hurco Companies are associated (or correlated) with Kadant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kadant Inc has no effect on the direction of Hurco Companies i.e., Hurco Companies and Kadant go up and down completely randomly.

Pair Corralation between Hurco Companies and Kadant

Given the investment horizon of 90 days Hurco Companies is expected to under-perform the Kadant. In addition to that, Hurco Companies is 1.43 times more volatile than Kadant Inc. It trades about -0.45 of its total potential returns per unit of risk. Kadant Inc is currently generating about -0.53 per unit of volatility. If you would invest  41,279  in Kadant Inc on September 30, 2024 and sell it today you would lose (6,199) from holding Kadant Inc or give up 15.02% of portfolio value over 90 days.

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

Hurco Companies  vs.  Kadant Inc

Hurco Companies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hurco Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Kadant Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kadant Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Kadant is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Hurco Companies and Kadant

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

The idea behind Hurco Companies and Kadant 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.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..