Correlation Between Wartsila Oyj and Konecranes Plc
Can any of the company-specific risk be diversified away by investing in both Wartsila Oyj and Konecranes Plc 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 Wartsila Oyj and Konecranes Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wartsila Oyj Abp and Konecranes Plc, you can compare the effects of market volatilities on Wartsila Oyj and Konecranes Plc 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 Wartsila Oyj with a short position of Konecranes Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wartsila Oyj and Konecranes Plc.
Diversification Opportunities for Wartsila Oyj and Konecranes Plc
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Wartsila and Konecranes is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Wartsila Oyj Abp and Konecranes Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Konecranes Plc and Wartsila 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 Wartsila Oyj Abp are associated (or correlated) with Konecranes Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Konecranes Plc has no effect on the direction of Wartsila Oyj i.e., Wartsila Oyj and Konecranes Plc go up and down completely randomly.
Pair Corralation between Wartsila Oyj and Konecranes Plc
Assuming the 90 days trading horizon Wartsila Oyj Abp is expected to generate 0.98 times more return on investment than Konecranes Plc. However, Wartsila Oyj Abp is 1.02 times less risky than Konecranes Plc. It trades about 0.07 of its potential returns per unit of risk. Konecranes Plc is currently generating about 0.07 per unit of risk. If you would invest 1,375 in Wartsila Oyj Abp on November 3, 2024 and sell it today you would earn a total of 451.00 from holding Wartsila Oyj Abp or generate 32.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wartsila Oyj Abp vs. Konecranes Plc
Performance |
| Timeline |
| Wartsila Oyj Abp |
| Konecranes Plc |
Wartsila Oyj and Konecranes Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wartsila Oyj and Konecranes Plc
The main advantage of trading using opposite Wartsila Oyj and Konecranes Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wartsila Oyj position performs unexpectedly, Konecranes Plc 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 Konecranes Plc will offset losses from the drop in Konecranes Plc's long position.| Wartsila Oyj vs. Sampo Oyj A | Wartsila Oyj vs. Fortum Oyj | Wartsila Oyj vs. UPM Kymmene Oyj | Wartsila Oyj vs. Nordea Bank Abp |
| Konecranes Plc vs. Cargotec Oyj | Konecranes Plc vs. Sampo Oyj A | Konecranes Plc vs. Wartsila Oyj Abp | Konecranes Plc vs. Valmet Oyj |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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