Correlation Between Aspo Oyj and KONE Oyj
Can any of the company-specific risk be diversified away by investing in both Aspo Oyj and KONE Oyj 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 Aspo Oyj and KONE Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aspo Oyj and KONE Oyj, you can compare the effects of market volatilities on Aspo Oyj and KONE Oyj 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 Aspo Oyj with a short position of KONE Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspo Oyj and KONE Oyj.
Diversification Opportunities for Aspo Oyj and KONE Oyj
Weak diversification
The 3 months correlation between Aspo and KONE is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Aspo Oyj and KONE Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KONE Oyj and Aspo Oyj 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 Aspo Oyj are associated (or correlated) with KONE Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KONE Oyj has no effect on the direction of Aspo Oyj i.e., Aspo Oyj and KONE Oyj go up and down completely randomly.
Pair Corralation between Aspo Oyj and KONE Oyj
Assuming the 90 days trading horizon Aspo Oyj is expected to under-perform the KONE Oyj. But the stock apears to be less risky and, when comparing its historical volatility, Aspo Oyj is 1.15 times less risky than KONE Oyj. The stock trades about -0.59 of its potential returns per unit of risk. The KONE Oyj is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest 5,158 in KONE Oyj on August 27, 2024 and sell it today you would lose (252.00) from holding KONE Oyj or give up 4.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aspo Oyj vs. KONE Oyj
Performance |
| Timeline |
| Aspo Oyj |
| KONE Oyj |
Aspo Oyj and KONE Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspo Oyj and KONE Oyj
The main advantage of trading using opposite Aspo Oyj and KONE Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspo Oyj position performs unexpectedly, KONE Oyj 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 KONE Oyj will offset losses from the drop in KONE Oyj's long position.| Aspo Oyj vs. Tokmanni Group Oyj | Aspo Oyj vs. Kemira Oyj | Aspo Oyj vs. TietoEVRY Corp | Aspo Oyj vs. CapMan Oyj B |
| KONE Oyj vs. Aktia Bank Abp | KONE Oyj vs. Alandsbanken Abp B | KONE Oyj vs. Alandsbanken Abp A | KONE Oyj vs. Sampo Oyj A |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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