Correlation Between KENNAMETAL INC and SBI Insurance
Can any of the company-specific risk be diversified away by investing in both KENNAMETAL INC and SBI Insurance 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 KENNAMETAL INC and SBI Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KENNAMETAL INC and SBI Insurance Group, you can compare the effects of market volatilities on KENNAMETAL INC and SBI Insurance 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 KENNAMETAL INC with a short position of SBI Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENNAMETAL INC and SBI Insurance.
Diversification Opportunities for KENNAMETAL INC and SBI Insurance
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KENNAMETAL and SBI is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding KENNAMETAL INC and SBI Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Insurance Group and KENNAMETAL INC 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 KENNAMETAL INC are associated (or correlated) with SBI Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Insurance Group has no effect on the direction of KENNAMETAL INC i.e., KENNAMETAL INC and SBI Insurance go up and down completely randomly.
Pair Corralation between KENNAMETAL INC and SBI Insurance
Assuming the 90 days trading horizon KENNAMETAL INC is expected to generate 1.89 times more return on investment than SBI Insurance. However, KENNAMETAL INC is 1.89 times more volatile than SBI Insurance Group. It trades about 0.07 of its potential returns per unit of risk. SBI Insurance Group is currently generating about 0.13 per unit of risk. If you would invest 2,283 in KENNAMETAL INC on September 18, 2024 and sell it today you would earn a total of 237.00 from holding KENNAMETAL INC or generate 10.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
KENNAMETAL INC vs. SBI Insurance Group
Performance |
Timeline |
KENNAMETAL INC |
SBI Insurance Group |
KENNAMETAL INC and SBI Insurance Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with KENNAMETAL INC and SBI Insurance
The main advantage of trading using opposite KENNAMETAL INC and SBI Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENNAMETAL INC position performs unexpectedly, SBI Insurance 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 SBI Insurance will offset losses from the drop in SBI Insurance's long position.KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Apple Inc |
SBI Insurance vs. Apple Inc | SBI Insurance vs. Apple Inc | SBI Insurance vs. Apple Inc | SBI Insurance vs. Apple Inc |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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