Correlation Between KONE Oyj and Nordex SE
Can any of the company-specific risk be diversified away by investing in both KONE Oyj and Nordex SE 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 Nordex SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KONE Oyj and Nordex SE, you can compare the effects of market volatilities on KONE Oyj and Nordex SE 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 Nordex SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of KONE Oyj and Nordex SE.
Diversification Opportunities for KONE Oyj and Nordex SE
Modest diversification
The 3 months correlation between KONE and Nordex is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding KONE Oyj and Nordex SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordex SE 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 Nordex SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordex SE has no effect on the direction of KONE Oyj i.e., KONE Oyj and Nordex SE go up and down completely randomly.
Pair Corralation between KONE Oyj and Nordex SE
Assuming the 90 days horizon KONE Oyj is expected to generate 2.06 times less return on investment than Nordex SE. But when comparing it to its historical volatility, KONE Oyj is 1.41 times less risky than Nordex SE. It trades about 0.01 of its potential returns per unit of risk. Nordex SE is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,338 in Nordex SE on August 29, 2024 and sell it today you would earn a total of 85.00 from holding Nordex SE or generate 6.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 78.99% |
| Values | Daily Returns |
KONE Oyj vs. Nordex SE
Performance |
| Timeline |
| KONE Oyj |
| Nordex SE |
KONE Oyj and Nordex SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KONE Oyj and Nordex SE
The main advantage of trading using opposite KONE Oyj and Nordex SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KONE Oyj position performs unexpectedly, Nordex SE 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 Nordex SE will offset losses from the drop in Nordex SE's long position.| KONE Oyj vs. Spirax Sarco Engineering PLC | KONE Oyj vs. Atlas Copco ADR | KONE Oyj vs. Vestas Wind Systems | KONE Oyj vs. IDEX Corporation |
| Nordex SE vs. Atlas Copco AB | Nordex SE vs. Atlas Copco ADR | Nordex SE vs. Siemens AG Class | Nordex SE vs. Sandvik AB ADR |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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