Correlation Between KION GROUP and Volvo AB
Can any of the company-specific risk be diversified away by investing in both KION GROUP and Volvo 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 KION GROUP and Volvo AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KION GROUP AG and Volvo AB ADR, you can compare the effects of market volatilities on KION GROUP and Volvo 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 KION GROUP with a short position of Volvo AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of KION GROUP and Volvo AB.
Diversification Opportunities for KION GROUP and Volvo AB
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KION and Volvo is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding KION GROUP AG and Volvo AB ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volvo AB ADR and KION GROUP 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 KION GROUP AG are associated (or correlated) with Volvo AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volvo AB ADR has no effect on the direction of KION GROUP i.e., KION GROUP and Volvo AB go up and down completely randomly.
Pair Corralation between KION GROUP and Volvo AB
Assuming the 90 days horizon KION GROUP AG is expected to under-perform the Volvo AB. In addition to that, KION GROUP is 1.17 times more volatile than Volvo AB ADR. It trades about -0.12 of its total potential returns per unit of risk. Volvo AB ADR is currently generating about -0.01 per unit of volatility. If you would invest 2,606 in Volvo AB ADR on September 5, 2024 and sell it today you would lose (79.00) from holding Volvo AB ADR or give up 3.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KION GROUP AG vs. Volvo AB ADR
Performance |
| Timeline |
| KION GROUP AG |
| Volvo AB ADR |
KION GROUP and Volvo AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KION GROUP and Volvo AB
The main advantage of trading using opposite KION GROUP and Volvo AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KION GROUP position performs unexpectedly, Volvo 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 Volvo AB will offset losses from the drop in Volvo AB's long position.| KION GROUP vs. Caterpillar | KION GROUP vs. Deere Company | KION GROUP vs. Shyft Group | KION GROUP vs. Nikola Corp |
| Volvo AB vs. AB Volvo | Volvo AB vs. Deere Company | Volvo AB vs. Hino Motors Ltd | Volvo AB vs. Daimler Truck Holding |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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