Correlation Between KENNAMETAL INC and Seino Holdings

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

By analyzing existing cross correlation between KENNAMETAL INC and Seino Holdings Co, you can compare the effects of market volatilities on KENNAMETAL INC and Seino Holdings 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 Seino Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENNAMETAL INC and Seino Holdings.

Diversification Opportunities for KENNAMETAL INC and Seino Holdings

0.16

Correlation Coefficient

KENNAMETAL INC  Seino Holdings

Average diversification

The 3 months correlation between KENNAMETAL and Seino is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding KENNAMETAL INC and Seino Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seino Holdings 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 Seino Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seino Holdings has no effect on the direction of KENNAMETAL INC i.e., KENNAMETAL INC and Seino Holdings go up and down completely randomly.

Pair Corralation between KENNAMETAL INC and Seino Holdings

Assuming the 90 days trading horizon KENNAMETAL INC is expected to under-perform the Seino Holdings. In addition to that, KENNAMETAL INC is 1.52 times more volatile than Seino Holdings Co. It trades about -0.1 of its total potential returns per unit of risk. Seino Holdings Co is currently generating about 0.02 per unit of volatility. If you would invest  1,420  in Seino Holdings Co on December 28, 2024 and sell it today you would earn a total of  10.00  from holding Seino Holdings Co or generate 0.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

KENNAMETAL INC  vs.  Seino Holdings Co

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 latest fragile 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.

Seino Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Seino Holdings Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Seino Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with KENNAMETAL INC and Seino Holdings

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

The idea behind KENNAMETAL INC and Seino Holdings Co 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.