Correlation Between Kone Oyj and SMC Corp
Can any of the company-specific risk be diversified away by investing in both Kone Oyj and SMC Corp 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 SMC Corp 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 SMC Corp, you can compare the effects of market volatilities on Kone Oyj and SMC Corp 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 SMC Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kone Oyj and SMC Corp.
Diversification Opportunities for Kone Oyj and SMC Corp
Average diversification
The 3 months correlation between Kone and SMC is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Kone Oyj ADR and SMC Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMC Corp 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 SMC Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMC Corp has no effect on the direction of Kone Oyj i.e., Kone Oyj and SMC Corp go up and down completely randomly.
Pair Corralation between Kone Oyj and SMC Corp
Assuming the 90 days horizon Kone Oyj ADR is expected to generate 0.64 times more return on investment than SMC Corp. However, Kone Oyj ADR is 1.57 times less risky than SMC Corp. It trades about -0.01 of its potential returns per unit of risk. SMC Corp is currently generating about -0.05 per unit of risk. If you would invest 2,627 in Kone Oyj ADR on August 25, 2024 and sell it today you would lose (84.00) from holding Kone Oyj ADR or give up 3.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kone Oyj ADR vs. SMC Corp
Performance |
| Timeline |
| Kone Oyj ADR |
| SMC Corp |
Kone Oyj and SMC Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kone Oyj and SMC Corp
The main advantage of trading using opposite Kone Oyj and SMC Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kone Oyj position performs unexpectedly, SMC Corp 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 SMC Corp will offset losses from the drop in SMC Corp'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 |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Stocks Directory Find actively traded stocks across global markets | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |