Correlation Between Fiskars Oyj and Kingfisher Plc

Can any of the company-specific risk be diversified away by investing in both Fiskars Oyj and Kingfisher 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 Fiskars Oyj and Kingfisher Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fiskars Oyj Abp and Kingfisher plc, you can compare the effects of market volatilities on Fiskars Oyj and Kingfisher 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 Fiskars Oyj with a short position of Kingfisher Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiskars Oyj and Kingfisher Plc.

Diversification Opportunities for Fiskars Oyj and Kingfisher Plc

-0.03

Correlation Coefficient

Fiskars Oyj  Kingfisher Plc

Good diversification

The 3 months correlation between Fiskars and Kingfisher is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Fiskars Oyj Abp and Kingfisher plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingfisher plc and Fiskars 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 Fiskars Oyj Abp are associated (or correlated) with Kingfisher Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingfisher plc has no effect on the direction of Fiskars Oyj i.e., Fiskars Oyj and Kingfisher Plc go up and down completely randomly.

Pair Corralation between Fiskars Oyj and Kingfisher Plc

Assuming the 90 days horizon Fiskars Oyj Abp is expected to generate 0.94 times more return on investment than Kingfisher Plc. However, Fiskars Oyj Abp is 1.06 times less risky than Kingfisher Plc. It trades about 0.09 of its potential returns per unit of risk. Kingfisher plc is currently generating about 0.01 per unit of risk. If you would invest  1,428  in Fiskars Oyj Abp on December 10, 2024 and sell it today you would earn a total of  106.00  from holding Fiskars Oyj Abp or generate 7.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Fiskars Oyj Abp  vs.  Kingfisher plc

Fiskars Oyj Abp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fiskars Oyj Abp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Fiskars Oyj may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Kingfisher plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kingfisher plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Kingfisher Plc is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fiskars Oyj and Kingfisher Plc

The main advantage of trading using opposite Fiskars Oyj and Kingfisher Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiskars Oyj position performs unexpectedly, Kingfisher 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 Kingfisher Plc will offset losses from the drop in Kingfisher Plc's long position.

The idea behind Fiskars Oyj Abp and Kingfisher plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.