Correlation Between Kadant and Gorman Rupp

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

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

Diversification Opportunities for Kadant and Gorman Rupp

0.6

Correlation Coefficient

Kadant  Gorman Rupp

Poor diversification

The 3 months correlation between Kadant and Gorman is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Kadant Inc and Gorman Rupp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gorman Rupp 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 Gorman Rupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gorman Rupp has no effect on the direction of Kadant i.e., Kadant and Gorman Rupp go up and down completely randomly.

Pair Corralation between Kadant and Gorman Rupp

Considering the 90-day investment horizon Kadant is expected to generate 7.32 times less return on investment than Gorman Rupp. In addition to that, Kadant is 1.37 times more volatile than Gorman Rupp. It trades about 0.02 of its total potential returns per unit of risk. Gorman Rupp is currently generating about 0.21 per unit of volatility. If you would invest  3,318  in Gorman Rupp on February 22, 2025 and sell it today you would earn a total of  300.00  from holding Gorman Rupp or generate 9.04% return on investment over 90 days.

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

Kadant Inc  vs.  Gorman Rupp

Kadant Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kadant Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Gorman Rupp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gorman Rupp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Gorman Rupp is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Kadant and Gorman Rupp

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

The idea behind Kadant Inc and Gorman Rupp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.