Correlation Between KONE Oyj and Raute Oyj
Can any of the company-specific risk be diversified away by investing in both KONE Oyj and Raute 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 Raute 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 Raute Oyj, you can compare the effects of market volatilities on KONE Oyj and Raute 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 Raute Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of KONE Oyj and Raute Oyj.
Diversification Opportunities for KONE Oyj and Raute Oyj
Very good diversification
The 3 months correlation between KONE and Raute is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding KONE Oyj and Raute Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raute Oyj 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 Raute Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raute Oyj has no effect on the direction of KONE Oyj i.e., KONE Oyj and Raute Oyj go up and down completely randomly.
Pair Corralation between KONE Oyj and Raute Oyj
Assuming the 90 days trading horizon KONE Oyj is expected to under-perform the Raute Oyj. But the stock apears to be less risky and, when comparing its historical volatility, KONE Oyj is 1.45 times less risky than Raute Oyj. The stock trades about -0.2 of its potential returns per unit of risk. The Raute Oyj is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,275 in Raute Oyj on August 27, 2024 and sell it today you would earn a total of 15.00 from holding Raute Oyj or generate 1.18% 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. Raute Oyj
Performance |
| Timeline |
| KONE Oyj |
| Raute Oyj |
KONE Oyj and Raute Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KONE Oyj and Raute Oyj
The main advantage of trading using opposite KONE Oyj and Raute Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KONE Oyj position performs unexpectedly, Raute 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 Raute Oyj will offset losses from the drop in Raute Oyj's long position.| KONE Oyj vs. Aktia Bank Abp | KONE Oyj vs. Alandsbanken Abp B | KONE Oyj vs. Alandsbanken Abp A | KONE Oyj vs. Sampo Oyj A |
| Raute Oyj vs. Aktia Bank Abp | Raute Oyj vs. Alandsbanken Abp B | Raute Oyj vs. Alandsbanken Abp A | Raute Oyj vs. Sampo Oyj A |
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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