Correlation Between Kone Oyj and Rockwell Automation
Can any of the company-specific risk be diversified away by investing in both Kone Oyj and Rockwell Automation 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 Rockwell Automation 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 Rockwell Automation, you can compare the effects of market volatilities on Kone Oyj and Rockwell Automation 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 Rockwell Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kone Oyj and Rockwell Automation.
Diversification Opportunities for Kone Oyj and Rockwell Automation
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kone and Rockwell is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Kone Oyj ADR and Rockwell Automation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockwell Automation 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 Rockwell Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockwell Automation has no effect on the direction of Kone Oyj i.e., Kone Oyj and Rockwell Automation go up and down completely randomly.
Pair Corralation between Kone Oyj and Rockwell Automation
Assuming the 90 days horizon Kone Oyj ADR is expected to under-perform the Rockwell Automation. But the pink sheet apears to be less risky and, when comparing its historical volatility, Kone Oyj ADR is 1.8 times less risky than Rockwell Automation. The pink sheet trades about -0.24 of its potential returns per unit of risk. The Rockwell Automation is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 26,645 in Rockwell Automation on August 25, 2024 and sell it today you would earn a total of 2,441 from holding Rockwell Automation or generate 9.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kone Oyj ADR vs. Rockwell Automation
Performance |
| Timeline |
| Kone Oyj ADR |
| Rockwell Automation |
Kone Oyj and Rockwell Automation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kone Oyj and Rockwell Automation
The main advantage of trading using opposite Kone Oyj and Rockwell Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kone Oyj position performs unexpectedly, Rockwell Automation 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 Rockwell Automation will offset losses from the drop in Rockwell Automation's long position.| Kone Oyj vs. Aumann AG | Kone Oyj vs. Arista Power | Kone Oyj vs. Atlas Copco AB | Kone Oyj vs. American Commerce Solutions |
| Rockwell Automation vs. Dover | Rockwell Automation vs. Illinois Tool Works | Rockwell Automation vs. Ingersoll Rand | Rockwell Automation vs. Eaton PLC |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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