Correlation Between Konecranes Plc and Kreate Group

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

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

Diversification Opportunities for Konecranes Plc and Kreate Group

0.64

Correlation Coefficient

Konecranes Plc  Kreate Group

Poor diversification

The 3 months correlation between Konecranes and Kreate is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Konecranes Plc and Kreate Group Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kreate Group Oyj and Konecranes 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 Konecranes Plc are associated (or correlated) with Kreate Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kreate Group Oyj has no effect on the direction of Konecranes Plc i.e., Konecranes Plc and Kreate Group go up and down completely randomly.

Pair Corralation between Konecranes Plc and Kreate Group

Assuming the 90 days trading horizon Konecranes Plc is expected to generate 1.3 times more return on investment than Kreate Group. However, Konecranes Plc is 1.3 times more volatile than Kreate Group Oyj. It trades about 0.1 of its potential returns per unit of risk. Kreate Group Oyj is currently generating about -0.01 per unit of risk. If you would invest  5,965  in Konecranes Plc on September 5, 2024 and sell it today you would earn a total of  680.00  from holding Konecranes Plc or generate 11.4% return on investment over 90 days.

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

Konecranes Plc  vs.  Kreate Group Oyj

Konecranes Plc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Konecranes Plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Konecranes Plc may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kreate Group Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kreate Group Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Kreate Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Konecranes Plc and Kreate Group

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

The idea behind Konecranes Plc and Kreate Group 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 Global Correlations module to find global opportunities by holding instruments from different markets.