Correlation Between KONE Oyj and YIT Oyj
Can any of the company-specific risk be diversified away by investing in both KONE Oyj and YIT 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 YIT 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 YIT Oyj, you can compare the effects of market volatilities on KONE Oyj and YIT 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 YIT Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of KONE Oyj and YIT Oyj.
Diversification Opportunities for KONE Oyj and YIT Oyj
Average diversification
The 3 months correlation between KONE and YIT is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding KONE Oyj and YIT Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YIT 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 YIT Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YIT Oyj has no effect on the direction of KONE Oyj i.e., KONE Oyj and YIT Oyj go up and down completely randomly.
Pair Corralation between KONE Oyj and YIT Oyj
Assuming the 90 days trading horizon KONE Oyj is expected to generate 8.46 times less return on investment than YIT Oyj. But when comparing it to its historical volatility, KONE Oyj is 2.23 times less risky than YIT Oyj. It trades about 0.02 of its potential returns per unit of risk. YIT Oyj is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 158.00 in YIT Oyj on October 22, 2024 and sell it today you would earn a total of 81.00 from holding YIT Oyj or generate 51.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KONE Oyj vs. YIT Oyj
Performance |
| Timeline |
| KONE Oyj |
| YIT Oyj |
KONE Oyj and YIT Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KONE Oyj and YIT Oyj
The main advantage of trading using opposite KONE Oyj and YIT Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KONE Oyj position performs unexpectedly, YIT 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 YIT Oyj will offset losses from the drop in YIT 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 |
| YIT Oyj vs. Outokumpu Oyj | YIT Oyj vs. Wartsila Oyj Abp | YIT Oyj vs. Telia Company AB | YIT Oyj vs. Konecranes Plc |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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