Correlation Between CapMan Oyj and KONE Oyj
Can any of the company-specific risk be diversified away by investing in both CapMan 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 CapMan 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 CapMan Oyj B and KONE Oyj, you can compare the effects of market volatilities on CapMan 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 CapMan Oyj with a short position of KONE Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of CapMan Oyj and KONE Oyj.
Diversification Opportunities for CapMan Oyj and KONE Oyj
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CapMan and KONE is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding CapMan Oyj B and KONE Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KONE Oyj and CapMan 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 CapMan Oyj B 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 CapMan Oyj i.e., CapMan Oyj and KONE Oyj go up and down completely randomly.
Pair Corralation between CapMan Oyj and KONE Oyj
Assuming the 90 days trading horizon CapMan Oyj B is expected to under-perform the KONE Oyj. But the stock apears to be less risky and, when comparing its historical volatility, CapMan Oyj B is 1.25 times less risky than KONE Oyj. The stock trades about -0.29 of its potential returns per unit of risk. The KONE Oyj is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest 5,180 in KONE Oyj on August 24, 2024 and sell it today you would lose (331.00) from holding KONE Oyj or give up 6.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CapMan Oyj B vs. KONE Oyj
Performance |
| Timeline |
| CapMan Oyj B |
| KONE Oyj |
CapMan Oyj and KONE Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CapMan Oyj and KONE Oyj
The main advantage of trading using opposite CapMan Oyj and KONE Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CapMan 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.| CapMan Oyj vs. Nordea Bank Abp | CapMan Oyj vs. Fortum Oyj | CapMan Oyj vs. UPM Kymmene Oyj | CapMan Oyj vs. Neste Oil Oyj |
| KONE Oyj vs. Sampo Oyj A | KONE Oyj vs. Fortum Oyj | KONE Oyj vs. UPM Kymmene Oyj | KONE Oyj vs. Neste Oil Oyj |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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