Correlation Between Kone Oyj and Schneider Electric
Can any of the company-specific risk be diversified away by investing in both Kone Oyj and Schneider Electric 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 Schneider Electric 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 Schneider Electric SA, you can compare the effects of market volatilities on Kone Oyj and Schneider Electric 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 Schneider Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kone Oyj and Schneider Electric.
Diversification Opportunities for Kone Oyj and Schneider Electric
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kone and Schneider is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Kone Oyj ADR and Schneider Electric SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schneider Electric 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 Schneider Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schneider Electric has no effect on the direction of Kone Oyj i.e., Kone Oyj and Schneider Electric go up and down completely randomly.
Pair Corralation between Kone Oyj and Schneider Electric
Assuming the 90 days horizon Kone Oyj ADR is expected to under-perform the Schneider Electric. But the pink sheet apears to be less risky and, when comparing its historical volatility, Kone Oyj ADR is 1.03 times less risky than Schneider Electric. The pink sheet trades about -0.3 of its potential returns per unit of risk. The Schneider Electric SA is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest 5,312 in Schneider Electric SA on August 29, 2024 and sell it today you would lose (298.00) from holding Schneider Electric SA or give up 5.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Kone Oyj ADR vs. Schneider Electric SA
Performance |
| Timeline |
| Kone Oyj ADR |
| Schneider Electric |
Kone Oyj and Schneider Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kone Oyj and Schneider Electric
The main advantage of trading using opposite Kone Oyj and Schneider Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kone Oyj position performs unexpectedly, Schneider Electric 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 Schneider Electric will offset losses from the drop in Schneider Electric's long position.| Kone Oyj vs. Parker Hannifin | Kone Oyj vs. Eaton PLC | Kone Oyj vs. Dover | Kone Oyj vs. Illinois Tool Works |
| Schneider Electric vs. Sandvik AB ADR | Schneider Electric vs. Ingersoll Rand | Schneider Electric vs. Fanuc | Schneider Electric vs. Nordex SE |
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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