Correlation Between Fanuc and KONE Oyj
Can any of the company-specific risk be diversified away by investing in both Fanuc 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 Fanuc and KONE Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fanuc and KONE Oyj, you can compare the effects of market volatilities on Fanuc 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 Fanuc with a short position of KONE Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fanuc and KONE Oyj.
Diversification Opportunities for Fanuc and KONE Oyj
Good diversification
The 3 months correlation between Fanuc and KONE is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Fanuc and KONE Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KONE Oyj and Fanuc 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 Fanuc 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 Fanuc i.e., Fanuc and KONE Oyj go up and down completely randomly.
Pair Corralation between Fanuc and KONE Oyj
Assuming the 90 days horizon Fanuc is expected to under-perform the KONE Oyj. But the pink sheet apears to be less risky and, when comparing its historical volatility, Fanuc is 1.12 times less risky than KONE Oyj. The pink sheet trades about -0.01 of its potential returns per unit of risk. The KONE Oyj is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 4,881 in KONE Oyj on August 26, 2024 and sell it today you would earn a total of 227.00 from holding KONE Oyj or generate 4.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 79.07% |
| Values | Daily Returns |
Fanuc vs. KONE Oyj
Performance |
| Timeline |
| Fanuc |
| KONE Oyj |
Fanuc and KONE Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fanuc and KONE Oyj
The main advantage of trading using opposite Fanuc and KONE Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fanuc 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.The idea behind Fanuc and KONE Oyj 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.| 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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