Correlation Between Kone Oyj and Dear Cashmere
Can any of the company-specific risk be diversified away by investing in both Kone Oyj and Dear Cashmere 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 Dear Cashmere into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kone Oyj ADR and Dear Cashmere Holding, you can compare the effects of market volatilities on Kone Oyj and Dear Cashmere 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 Dear Cashmere. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kone Oyj and Dear Cashmere.
Diversification Opportunities for Kone Oyj and Dear Cashmere
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Kone and Dear is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Kone Oyj ADR and Dear Cashmere Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dear Cashmere Holding 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 ADR are associated (or correlated) with Dear Cashmere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dear Cashmere Holding has no effect on the direction of Kone Oyj i.e., Kone Oyj and Dear Cashmere go up and down completely randomly.
Pair Corralation between Kone Oyj and Dear Cashmere
Assuming the 90 days horizon Kone Oyj ADR is expected to under-perform the Dear Cashmere. But the pink sheet apears to be less risky and, when comparing its historical volatility, Kone Oyj ADR is 6.31 times less risky than Dear Cashmere. The pink sheet trades about -0.16 of its potential returns per unit of risk. The Dear Cashmere Holding is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Dear Cashmere Holding on September 4, 2024 and sell it today you would earn a total of 3.00 from holding Dear Cashmere Holding or generate 21.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kone Oyj ADR vs. Dear Cashmere Holding
Performance |
| Timeline |
| Kone Oyj ADR |
| Dear Cashmere Holding |
Kone Oyj and Dear Cashmere Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kone Oyj and Dear Cashmere
The main advantage of trading using opposite Kone Oyj and Dear Cashmere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kone Oyj position performs unexpectedly, Dear Cashmere 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 Dear Cashmere will offset losses from the drop in Dear Cashmere's long position.| Kone Oyj vs. Dear Cashmere Holding | Kone Oyj vs. Goff Corp | Kone Oyj vs. Wialan Technologies | Kone Oyj vs. Cgrowth Capital |
| Dear Cashmere vs. Salesforce | Dear Cashmere vs. SAP SE ADR | Dear Cashmere vs. ServiceNow | Dear Cashmere vs. Intuit Inc |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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