Correlation Between KONE Oyj and Elecster Oyj
Can any of the company-specific risk be diversified away by investing in both KONE Oyj and Elecster 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 KONE Oyj and Elecster Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KONE Oyj and Elecster Oyj A, you can compare the effects of market volatilities on KONE Oyj and Elecster 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 KONE Oyj with a short position of Elecster Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of KONE Oyj and Elecster Oyj.
Diversification Opportunities for KONE Oyj and Elecster Oyj
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between KONE and Elecster is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding KONE Oyj and Elecster Oyj A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elecster Oyj 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 Elecster Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elecster Oyj A has no effect on the direction of KONE Oyj i.e., KONE Oyj and Elecster Oyj go up and down completely randomly.
Pair Corralation between KONE Oyj and Elecster Oyj
Assuming the 90 days trading horizon KONE Oyj is expected to under-perform the Elecster Oyj. But the stock apears to be less risky and, when comparing its historical volatility, KONE Oyj is 3.22 times less risky than Elecster Oyj. The stock trades about -0.25 of its potential returns per unit of risk. The Elecster Oyj A is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 348.00 in Elecster Oyj A on August 30, 2024 and sell it today you would lose (2.00) from holding Elecster Oyj A or give up 0.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
KONE Oyj vs. Elecster Oyj A
Performance |
| Timeline |
| KONE Oyj |
| Elecster Oyj A |
KONE Oyj and Elecster Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KONE Oyj and Elecster Oyj
The main advantage of trading using opposite KONE Oyj and Elecster Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KONE Oyj position performs unexpectedly, Elecster 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 Elecster Oyj will offset losses from the drop in Elecster Oyj'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 |
| Elecster Oyj vs. Raute Oyj | Elecster Oyj vs. Honkarakenne Oyj B | Elecster Oyj vs. Wulff Yhtiot Oy | Elecster Oyj vs. Biohit Oyj B |
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 Channel module to use Commodity Channel Index to analyze current equity momentum.
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