Correlation Between Kone Oyj and Smiths Group
Can any of the company-specific risk be diversified away by investing in both Kone Oyj and Smiths Group 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 Smiths Group 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 Smiths Group Plc, you can compare the effects of market volatilities on Kone Oyj and Smiths Group 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 Smiths Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kone Oyj and Smiths Group.
Diversification Opportunities for Kone Oyj and Smiths Group
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kone and Smiths is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Kone Oyj ADR and Smiths Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smiths Group Plc 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 Smiths Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smiths Group Plc has no effect on the direction of Kone Oyj i.e., Kone Oyj and Smiths Group go up and down completely randomly.
Pair Corralation between Kone Oyj and Smiths Group
Assuming the 90 days horizon Kone Oyj ADR is expected to under-perform the Smiths Group. But the pink sheet apears to be less risky and, when comparing its historical volatility, Kone Oyj ADR is 1.57 times less risky than Smiths Group. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Smiths Group Plc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 2,013 in Smiths Group Plc on August 31, 2024 and sell it today you would earn a total of 272.00 from holding Smiths Group Plc or generate 13.51% 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. Smiths Group Plc
Performance |
| Timeline |
| Kone Oyj ADR |
| Smiths Group Plc |
Kone Oyj and Smiths Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kone Oyj and Smiths Group
The main advantage of trading using opposite Kone Oyj and Smiths Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kone Oyj position performs unexpectedly, Smiths Group 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 Smiths Group will offset losses from the drop in Smiths Group's long position.| Kone Oyj vs. GE Aerospace | Kone Oyj vs. Eaton PLC | Kone Oyj vs. Siemens AG Class | Kone Oyj vs. Schneider Electric SA |
| Smiths Group vs. Vestas Wind Systems | Smiths Group vs. Nuscale Power Corp | Smiths Group vs. Ballard Power Systems | Smiths Group vs. Rockwell Automation |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |