Correlation Between KONE Oyj and Alandsbanken Abp
Can any of the company-specific risk be diversified away by investing in both KONE Oyj and Alandsbanken Abp 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 KONE Oyj and Alandsbanken Abp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KONE Oyj and Alandsbanken Abp A, you can compare the effects of market volatilities on KONE Oyj and Alandsbanken Abp 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 KONE Oyj with a short position of Alandsbanken Abp. Check out your portfolio center. Please also check ongoing floating volatility patterns of KONE Oyj and Alandsbanken Abp.
Diversification Opportunities for KONE Oyj and Alandsbanken Abp
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between KONE and Alandsbanken is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding KONE Oyj and Alandsbanken Abp A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alandsbanken Abp A and KONE 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 KONE Oyj are associated (or correlated) with Alandsbanken Abp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alandsbanken Abp A has no effect on the direction of KONE Oyj i.e., KONE Oyj and Alandsbanken Abp go up and down completely randomly.
Pair Corralation between KONE Oyj and Alandsbanken Abp
Assuming the 90 days trading horizon KONE Oyj is expected to under-perform the Alandsbanken Abp. In addition to that, KONE Oyj is 1.47 times more volatile than Alandsbanken Abp A. It trades about -0.25 of its total potential returns per unit of risk. Alandsbanken Abp A is currently generating about 0.03 per unit of volatility. If you would invest 3,410 in Alandsbanken Abp A on August 30, 2024 and sell it today you would earn a total of 20.00 from holding Alandsbanken Abp A or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KONE Oyj vs. Alandsbanken Abp A
Performance |
| Timeline |
| KONE Oyj |
| Alandsbanken Abp A |
KONE Oyj and Alandsbanken Abp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KONE Oyj and Alandsbanken Abp
The main advantage of trading using opposite KONE Oyj and Alandsbanken Abp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KONE Oyj position performs unexpectedly, Alandsbanken Abp 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 Alandsbanken Abp will offset losses from the drop in Alandsbanken Abp's long position.| KONE Oyj vs. Sampo Oyj A | KONE Oyj vs. Fortum Oyj | KONE Oyj vs. UPM Kymmene Oyj | KONE Oyj vs. Neste Oil Oyj |
| Alandsbanken Abp vs. Aktia Bank Abp | Alandsbanken Abp vs. Alandsbanken Abp B | Alandsbanken Abp vs. CapMan Oyj B | Alandsbanken Abp vs. Tokmanni Group 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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