Correlation Between KONE Oyj and Spirax-Sarco Engineering
Can any of the company-specific risk be diversified away by investing in both KONE Oyj and Spirax-Sarco Engineering 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 Spirax-Sarco Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KONE Oyj and Spirax Sarco Engineering PLC, you can compare the effects of market volatilities on KONE Oyj and Spirax-Sarco Engineering 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 Spirax-Sarco Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of KONE Oyj and Spirax-Sarco Engineering.
Diversification Opportunities for KONE Oyj and Spirax-Sarco Engineering
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between KONE and Spirax-Sarco is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding KONE Oyj and Spirax Sarco Engineering PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirax-Sarco Engineering 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 Spirax-Sarco Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirax-Sarco Engineering has no effect on the direction of KONE Oyj i.e., KONE Oyj and Spirax-Sarco Engineering go up and down completely randomly.
Pair Corralation between KONE Oyj and Spirax-Sarco Engineering
Assuming the 90 days horizon KONE Oyj is expected to generate 0.94 times more return on investment than Spirax-Sarco Engineering. However, KONE Oyj is 1.07 times less risky than Spirax-Sarco Engineering. It trades about 0.01 of its potential returns per unit of risk. Spirax Sarco Engineering PLC is currently generating about -0.03 per unit of risk. If you would invest 4,994 in KONE Oyj on August 29, 2024 and sell it today you would earn a total of 114.00 from holding KONE Oyj or generate 2.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 81.12% |
| Values | Daily Returns |
KONE Oyj vs. Spirax Sarco Engineering PLC
Performance |
| Timeline |
| KONE Oyj |
| Spirax-Sarco Engineering |
KONE Oyj and Spirax-Sarco Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KONE Oyj and Spirax-Sarco Engineering
The main advantage of trading using opposite KONE Oyj and Spirax-Sarco Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KONE Oyj position performs unexpectedly, Spirax-Sarco Engineering 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 Spirax-Sarco Engineering will offset losses from the drop in Spirax-Sarco Engineering'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 |
| Spirax-Sarco Engineering vs. Atlas Copco AB | Spirax-Sarco Engineering vs. Aumann AG | Spirax-Sarco Engineering vs. Amaero International | Spirax-Sarco Engineering vs. Arista Power |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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