Correlation Between Konecranes Plc and Wartsila Oyj

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

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

Diversification Opportunities for Konecranes Plc and Wartsila Oyj

0.62

Correlation Coefficient

Konecranes Plc  Wartsila Oyj

Poor diversification

The 3 months correlation between Konecranes and Wartsila is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Konecranes Plc and Wartsila Oyj Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wartsila Oyj Abp 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 Wartsila Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wartsila Oyj Abp has no effect on the direction of Konecranes Plc i.e., Konecranes Plc and Wartsila Oyj go up and down completely randomly.

Pair Corralation between Konecranes Plc and Wartsila Oyj

Assuming the 90 days trading horizon Konecranes Plc is expected to generate 1.08 times more return on investment than Wartsila Oyj. However, Konecranes Plc is 1.08 times more volatile than Wartsila Oyj Abp. It trades about 0.06 of its potential returns per unit of risk. Wartsila Oyj Abp is currently generating about -0.01 per unit of risk. If you would invest  5,405  in Konecranes Plc on September 30, 2024 and sell it today you would earn a total of  785.00  from holding Konecranes Plc or generate 14.52% 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.  Wartsila Oyj Abp

Konecranes Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Konecranes Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Wartsila Oyj Abp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wartsila Oyj Abp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Konecranes Plc and Wartsila Oyj

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

The idea behind Konecranes Plc and Wartsila Oyj Abp 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.