Correlation Between Ballard Power and Kone Oyj
Can any of the company-specific risk be diversified away by investing in both Ballard Power 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 Ballard Power and Kone Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ballard Power Systems and Kone Oyj ADR, you can compare the effects of market volatilities on Ballard Power 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 Ballard Power with a short position of Kone Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ballard Power and Kone Oyj.
Diversification Opportunities for Ballard Power and Kone Oyj
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ballard and Kone is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ballard Power Systems and Kone Oyj ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kone Oyj ADR and Ballard Power 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 Ballard Power Systems 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 ADR has no effect on the direction of Ballard Power i.e., Ballard Power and Kone Oyj go up and down completely randomly.
Pair Corralation between Ballard Power and Kone Oyj
Given the investment horizon of 90 days Ballard Power Systems is expected to under-perform the Kone Oyj. In addition to that, Ballard Power is 3.43 times more volatile than Kone Oyj ADR. It trades about -0.04 of its total potential returns per unit of risk. Kone Oyj ADR is currently generating about -0.13 per unit of volatility. If you would invest 2,727 in Kone Oyj ADR on August 31, 2024 and sell it today you would lose (134.00) from holding Kone Oyj ADR or give up 4.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ballard Power Systems vs. Kone Oyj ADR
Performance |
| Timeline |
| Ballard Power Systems |
| Kone Oyj ADR |
Ballard Power and Kone Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ballard Power and Kone Oyj
The main advantage of trading using opposite Ballard Power and Kone Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ballard Power 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.| Ballard Power vs. Emerson Electric | Ballard Power vs. Eaton PLC | Ballard Power vs. Parker Hannifin | Ballard Power vs. Illinois Tool Works |
| Kone Oyj vs. GE Aerospace | Kone Oyj vs. Eaton PLC | Kone Oyj vs. Siemens AG Class | Kone Oyj vs. Schneider Electric SA |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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