Correlation Between KONE Oyj and Parker Hannifin
Can any of the company-specific risk be diversified away by investing in both KONE Oyj and Parker Hannifin 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 Parker Hannifin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KONE Oyj and Parker Hannifin, you can compare the effects of market volatilities on KONE Oyj and Parker Hannifin 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 Parker Hannifin. Check out your portfolio center. Please also check ongoing floating volatility patterns of KONE Oyj and Parker Hannifin.
Diversification Opportunities for KONE Oyj and Parker Hannifin
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between KONE and Parker is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding KONE Oyj and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin 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 Parker Hannifin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parker Hannifin has no effect on the direction of KONE Oyj i.e., KONE Oyj and Parker Hannifin go up and down completely randomly.
Pair Corralation between KONE Oyj and Parker Hannifin
Assuming the 90 days horizon KONE Oyj is expected to generate 2.46 times less return on investment than Parker Hannifin. But when comparing it to its historical volatility, KONE Oyj is 1.03 times less risky than Parker Hannifin. It trades about 0.04 of its potential returns per unit of risk. Parker Hannifin is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 52,375 in Parker Hannifin on September 1, 2024 and sell it today you would earn a total of 17,915 from holding Parker Hannifin or generate 34.21% 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. Parker Hannifin
Performance |
| Timeline |
| KONE Oyj |
| Parker Hannifin |
KONE Oyj and Parker Hannifin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KONE Oyj and Parker Hannifin
The main advantage of trading using opposite KONE Oyj and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KONE Oyj position performs unexpectedly, Parker Hannifin 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 Parker Hannifin will offset losses from the drop in Parker Hannifin's long position.| KONE Oyj vs. GE Aerospace | KONE Oyj vs. Eaton PLC | KONE Oyj vs. Siemens AG Class | KONE Oyj vs. Parker Hannifin |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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