Correlation Between Kadant and Standex International

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

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

Diversification Opportunities for Kadant and Standex International

0.97

Correlation Coefficient

Kadant  Standex International

Almost no diversification

The 3 months correlation between Kadant and Standex is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Kadant Inc and Standex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standex International and Kadant 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 Kadant Inc are associated (or correlated) with Standex International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standex International has no effect on the direction of Kadant i.e., Kadant and Standex International go up and down completely randomly.

Pair Corralation between Kadant and Standex International

Considering the 90-day investment horizon Kadant is expected to generate 1.13 times less return on investment than Standex International. In addition to that, Kadant is 1.08 times more volatile than Standex International. It trades about 0.15 of its total potential returns per unit of risk. Standex International is currently generating about 0.18 per unit of volatility. If you would invest  16,716  in Standex International on September 12, 2024 and sell it today you would earn a total of  4,208  from holding Standex International or generate 25.17% return on investment over 90 days.

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

Kadant Inc  vs.  Standex International

Kadant Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kadant Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Kadant demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Standex International

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Standex International are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Standex International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kadant and Standex International

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

The idea behind Kadant Inc and Standex International 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.