Correlation Between Konecranes Plc and Lassila Tikanoja

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

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

Diversification Opportunities for Konecranes Plc and Lassila Tikanoja

0.81

Correlation Coefficient

Konecranes Plc  Lassila Tikanoja

Very poor diversification

The 3 months correlation between Konecranes and Lassila is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Konecranes Plc and Lassila Tikanoja Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lassila Tikanoja 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 Lassila Tikanoja. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lassila Tikanoja Oyj has no effect on the direction of Konecranes Plc i.e., Konecranes Plc and Lassila Tikanoja go up and down completely randomly.

Pair Corralation between Konecranes Plc and Lassila Tikanoja

Assuming the 90 days trading horizon Konecranes Plc is expected to generate 1.72 times more return on investment than Lassila Tikanoja. However, Konecranes Plc is 1.72 times more volatile than Lassila Tikanoja Oyj. It trades about 0.15 of its potential returns per unit of risk. Lassila Tikanoja Oyj is currently generating about 0.21 per unit of risk. If you would invest  6,190  in Konecranes Plc on December 26, 2024 and sell it today you would earn a total of  1,020  from holding Konecranes Plc or generate 16.48% return on investment over 90 days.

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

Konecranes Plc  vs.  Lassila Tikanoja Oyj

Konecranes Plc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Konecranes Plc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Konecranes Plc exhibited solid returns over the last few months and may actually be approaching a breakup point.

Lassila Tikanoja Oyj

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lassila Tikanoja Oyj are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Lassila Tikanoja demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Konecranes Plc and Lassila Tikanoja

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

The idea behind Konecranes Plc and Lassila Tikanoja 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.