Correlation Between Dear Cashmere and KONE Oyj
Can any of the company-specific risk be diversified away by investing in both Dear Cashmere 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 Dear Cashmere and KONE Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dear Cashmere Holding and KONE Oyj, you can compare the effects of market volatilities on Dear Cashmere 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 Dear Cashmere with a short position of KONE Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dear Cashmere and KONE Oyj.
Diversification Opportunities for Dear Cashmere and KONE Oyj
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dear and KONE is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Dear Cashmere Holding and KONE Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KONE Oyj and Dear Cashmere 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 Dear Cashmere Holding 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 Dear Cashmere i.e., Dear Cashmere and KONE Oyj go up and down completely randomly.
Pair Corralation between Dear Cashmere and KONE Oyj
Given the investment horizon of 90 days Dear Cashmere Holding is expected to generate 9.0 times more return on investment than KONE Oyj. However, Dear Cashmere is 9.0 times more volatile than KONE Oyj. It trades about 0.14 of its potential returns per unit of risk. KONE Oyj is currently generating about -0.21 per unit of risk. If you would invest 14.00 in Dear Cashmere Holding on September 4, 2024 and sell it today you would earn a total of 3.00 from holding Dear Cashmere Holding or generate 21.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dear Cashmere Holding vs. KONE Oyj
Performance |
| Timeline |
| Dear Cashmere Holding |
| KONE Oyj |
Dear Cashmere and KONE Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dear Cashmere and KONE Oyj
The main advantage of trading using opposite Dear Cashmere and KONE Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dear Cashmere 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.| Dear Cashmere vs. Salesforce | Dear Cashmere vs. SAP SE ADR | Dear Cashmere vs. ServiceNow | Dear Cashmere vs. Intuit Inc |
| KONE Oyj vs. Spirax Sarco Engineering PLC | KONE Oyj vs. Atlas Copco ADR | KONE Oyj vs. Vestas Wind Systems | KONE Oyj vs. IDEX Corporation |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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