Correlation Between Geberit AG and Kone Oyj
Can any of the company-specific risk be diversified away by investing in both Geberit AG 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 Geberit AG and Kone Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Geberit AG ADR and Kone Oyj ADR, you can compare the effects of market volatilities on Geberit AG 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 Geberit AG with a short position of Kone Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geberit AG and Kone Oyj.
Diversification Opportunities for Geberit AG and Kone Oyj
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Geberit and Kone is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Geberit AG ADR 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 Geberit AG 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 Geberit AG ADR 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 Geberit AG i.e., Geberit AG and Kone Oyj go up and down completely randomly.
Pair Corralation between Geberit AG and Kone Oyj
Assuming the 90 days horizon Geberit AG ADR is expected to generate 1.11 times more return on investment than Kone Oyj. However, Geberit AG is 1.11 times more volatile than Kone Oyj ADR. It trades about -0.04 of its potential returns per unit of risk. Kone Oyj ADR is currently generating about -0.3 per unit of risk. If you would invest 6,038 in Geberit AG ADR on August 29, 2024 and sell it today you would lose (104.00) from holding Geberit AG ADR or give up 1.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Geberit AG ADR vs. Kone Oyj ADR
Performance |
| Timeline |
| Geberit AG ADR |
| Kone Oyj ADR |
Geberit AG and Kone Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geberit AG and Kone Oyj
The main advantage of trading using opposite Geberit AG and Kone Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geberit AG 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.| Geberit AG vs. DSV Panalpina AS | Geberit AG vs. SGS SA | Geberit AG vs. Givaudan SA ADR | Geberit AG vs. Kuehne Nagel International |
| Kone Oyj vs. Parker Hannifin | Kone Oyj vs. Eaton PLC | Kone Oyj vs. Dover | Kone Oyj vs. Illinois Tool Works |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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