Correlation Between KONE Oyj and Tulikivi Oyj
Can any of the company-specific risk be diversified away by investing in both KONE Oyj and Tulikivi 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 Tulikivi 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 Tulikivi Oyj A, you can compare the effects of market volatilities on KONE Oyj and Tulikivi 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 Tulikivi Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of KONE Oyj and Tulikivi Oyj.
Diversification Opportunities for KONE Oyj and Tulikivi Oyj
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KONE and Tulikivi is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding KONE Oyj and Tulikivi Oyj A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tulikivi 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 Tulikivi Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tulikivi Oyj A has no effect on the direction of KONE Oyj i.e., KONE Oyj and Tulikivi Oyj go up and down completely randomly.
Pair Corralation between KONE Oyj and Tulikivi Oyj
Assuming the 90 days trading horizon KONE Oyj is expected to generate 0.61 times more return on investment than Tulikivi Oyj. However, KONE Oyj is 1.63 times less risky than Tulikivi Oyj. It trades about 0.0 of its potential returns per unit of risk. Tulikivi Oyj A is currently generating about -0.02 per unit of risk. If you would invest 4,906 in KONE Oyj on October 7, 2024 and sell it today you would lose (181.00) from holding KONE Oyj or give up 3.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KONE Oyj vs. Tulikivi Oyj A
Performance |
| Timeline |
| KONE Oyj |
| Tulikivi Oyj A |
KONE Oyj and Tulikivi Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KONE Oyj and Tulikivi Oyj
The main advantage of trading using opposite KONE Oyj and Tulikivi Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KONE Oyj position performs unexpectedly, Tulikivi 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 Tulikivi Oyj will offset losses from the drop in Tulikivi Oyj's long position.| KONE Oyj vs. Sampo Oyj A | KONE Oyj vs. Fortum Oyj | KONE Oyj vs. UPM Kymmene Oyj | KONE Oyj vs. Nordea Bank Abp |
| Tulikivi Oyj vs. Sampo Oyj A | Tulikivi Oyj vs. Fortum Oyj | Tulikivi Oyj vs. UPM Kymmene Oyj | Tulikivi Oyj vs. Nordea Bank Abp |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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