Correlation Between Siemens AG and KONE Oyj
Can any of the company-specific risk be diversified away by investing in both Siemens AG and KONE Oyj 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 Siemens AG and KONE Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Siemens AG ADR and KONE Oyj, you can compare the effects of market volatilities on Siemens AG and KONE Oyj 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 Siemens AG with a short position of KONE Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siemens AG and KONE Oyj.
Diversification Opportunities for Siemens AG and KONE Oyj
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Siemens and KONE is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Siemens AG ADR and KONE Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KONE Oyj and Siemens AG 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 Siemens AG ADR are associated (or correlated) with KONE Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KONE Oyj has no effect on the direction of Siemens AG i.e., Siemens AG and KONE Oyj go up and down completely randomly.
Pair Corralation between Siemens AG and KONE Oyj
If you would invest 4,988 in KONE Oyj on August 29, 2024 and sell it today you would earn a total of 120.00 from holding KONE Oyj or generate 2.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 1.59% |
| Values | Daily Returns |
Siemens AG ADR vs. KONE Oyj
Performance |
| Timeline |
| Siemens AG ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| KONE Oyj |
Siemens AG and KONE Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Siemens AG and KONE Oyj
The main advantage of trading using opposite Siemens AG and KONE Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siemens AG position performs unexpectedly, KONE Oyj 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 KONE Oyj will offset losses from the drop in KONE Oyj's long position.| Siemens AG vs. Sandvik AB | Siemens AG vs. Schneider Electric SA | Siemens AG vs. KONE Oyj | Siemens AG vs. Atlas Copco AB |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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