Correlation Between KONE Oyj and SSAB AB
Can any of the company-specific risk be diversified away by investing in both KONE Oyj and SSAB AB 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 SSAB AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KONE Oyj and SSAB AB ser, you can compare the effects of market volatilities on KONE Oyj and SSAB AB 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 SSAB AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of KONE Oyj and SSAB AB.
Diversification Opportunities for KONE Oyj and SSAB AB
Poor diversification
The 3 months correlation between KONE and SSAB is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding KONE Oyj and SSAB AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSAB AB ser 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 SSAB AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSAB AB ser has no effect on the direction of KONE Oyj i.e., KONE Oyj and SSAB AB go up and down completely randomly.
Pair Corralation between KONE Oyj and SSAB AB
Assuming the 90 days trading horizon KONE Oyj is expected to under-perform the SSAB AB. But the stock apears to be less risky and, when comparing its historical volatility, KONE Oyj is 2.69 times less risky than SSAB AB. The stock trades about -0.01 of its potential returns per unit of risk. The SSAB AB ser is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 385.00 in SSAB AB ser on October 23, 2024 and sell it today you would earn a total of 17.00 from holding SSAB AB ser or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 93.75% |
| Values | Daily Returns |
KONE Oyj vs. SSAB AB ser
Performance |
| Timeline |
| KONE Oyj |
| SSAB AB ser |
KONE Oyj and SSAB AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KONE Oyj and SSAB AB
The main advantage of trading using opposite KONE Oyj and SSAB AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KONE Oyj position performs unexpectedly, SSAB AB 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 SSAB AB will offset losses from the drop in SSAB AB'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 |
| SSAB AB vs. SSAB AB ser | SSAB AB vs. Outokumpu Oyj | SSAB AB vs. Metsa Board Oyj | SSAB AB vs. Telia Company AB |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |