Correlation Between Solteq PLC and KONE Oyj
Can any of the company-specific risk be diversified away by investing in both Solteq PLC 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 Solteq PLC and KONE Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solteq PLC and KONE Oyj, you can compare the effects of market volatilities on Solteq PLC 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 Solteq PLC with a short position of KONE Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solteq PLC and KONE Oyj.
Diversification Opportunities for Solteq PLC and KONE Oyj
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Solteq and KONE is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Solteq PLC and KONE Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KONE Oyj and Solteq PLC 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 Solteq PLC 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 Solteq PLC i.e., Solteq PLC and KONE Oyj go up and down completely randomly.
Pair Corralation between Solteq PLC and KONE Oyj
Assuming the 90 days trading horizon Solteq PLC is expected to generate 3.14 times more return on investment than KONE Oyj. However, Solteq PLC is 3.14 times more volatile than KONE Oyj. It trades about 0.04 of its potential returns per unit of risk. KONE Oyj is currently generating about -0.2 per unit of risk. If you would invest 61.00 in Solteq PLC on August 27, 2024 and sell it today you would earn a total of 1.00 from holding Solteq PLC or generate 1.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solteq PLC vs. KONE Oyj
Performance |
| Timeline |
| Solteq PLC |
| KONE Oyj |
Solteq PLC and KONE Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solteq PLC and KONE Oyj
The main advantage of trading using opposite Solteq PLC and KONE Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solteq PLC 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.| Solteq PLC vs. CapMan Oyj B | Solteq PLC vs. HKFoods Oyj A | Solteq PLC vs. KONE Oyj | Solteq PLC vs. Exel Composites Oyj |
| KONE Oyj vs. Aktia Bank Abp | KONE Oyj vs. Alandsbanken Abp B | KONE Oyj vs. Alandsbanken Abp A | KONE Oyj vs. Sampo Oyj A |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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