Correlation Between KONE Oyj and SSH Communications
Can any of the company-specific risk be diversified away by investing in both KONE Oyj and SSH Communications 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 SSH Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KONE Oyj and SSH Communications Security, you can compare the effects of market volatilities on KONE Oyj and SSH Communications 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 SSH Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of KONE Oyj and SSH Communications.
Diversification Opportunities for KONE Oyj and SSH Communications
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between KONE and SSH is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding KONE Oyj and SSH Communications Security in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSH Communications 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 SSH Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSH Communications has no effect on the direction of KONE Oyj i.e., KONE Oyj and SSH Communications go up and down completely randomly.
Pair Corralation between KONE Oyj and SSH Communications
Assuming the 90 days trading horizon KONE Oyj is expected to generate 0.34 times more return on investment than SSH Communications. However, KONE Oyj is 2.91 times less risky than SSH Communications. It trades about -0.26 of its potential returns per unit of risk. SSH Communications Security is currently generating about -0.15 per unit of risk. If you would invest 5,208 in KONE Oyj on August 30, 2024 and sell it today you would lose (382.00) from holding KONE Oyj or give up 7.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KONE Oyj vs. SSH Communications Security
Performance |
| Timeline |
| KONE Oyj |
| SSH Communications |
KONE Oyj and SSH Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KONE Oyj and SSH Communications
The main advantage of trading using opposite KONE Oyj and SSH Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KONE Oyj position performs unexpectedly, SSH Communications 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 SSH Communications will offset losses from the drop in SSH Communications' long position.| KONE Oyj vs. Telefonaktiebolaget LM Ericsson | KONE Oyj vs. SSAB AB ser | KONE Oyj vs. SSAB AB ser | KONE Oyj vs. Telia Company AB |
| SSH Communications vs. Tecnotree Oyj | SSH Communications vs. Qt Group Oyj | SSH Communications vs. Bittium Oyj | SSH Communications vs. Harvia 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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