Correlation Between CapMan Oyj and KONE Oyj

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

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

Diversification Opportunities for CapMan Oyj and KONE Oyj

0.92

Correlation Coefficient

CapMan Oyj  KONE Oyj

Almost no diversification

The 3 months correlation between CapMan and KONE is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding CapMan Oyj B and KONE Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KONE Oyj and CapMan 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 CapMan Oyj B 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 CapMan Oyj i.e., CapMan Oyj and KONE Oyj go up and down completely randomly.

Pair Corralation between CapMan Oyj and KONE Oyj

Assuming the 90 days trading horizon CapMan Oyj is expected to generate 1.02 times less return on investment than KONE Oyj. In addition to that, CapMan Oyj is 1.47 times more volatile than KONE Oyj. It trades about 0.12 of its total potential returns per unit of risk. KONE Oyj is currently generating about 0.17 per unit of volatility. If you would invest  4,544  in KONE Oyj on December 30, 2024 and sell it today you would earn a total of  616.00  from holding KONE Oyj or generate 13.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

CapMan Oyj B  vs.  KONE Oyj

CapMan Oyj B

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CapMan Oyj B are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CapMan Oyj sustained solid returns over the last few months and may actually be approaching a breakup point.

KONE Oyj

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KONE Oyj are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, KONE Oyj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CapMan Oyj and KONE Oyj

The main advantage of trading using opposite CapMan Oyj and KONE Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CapMan Oyj 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.

The idea behind CapMan Oyj B and KONE Oyj 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.