Correlation Between Konecranes Plc and YIT Oyj

Can any of the company-specific risk be diversified away by investing in both Konecranes Plc and YIT 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 YIT 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 YIT Oyj, you can compare the effects of market volatilities on Konecranes Plc and YIT 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 YIT Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Konecranes Plc and YIT Oyj.

Diversification Opportunities for Konecranes Plc and YIT Oyj

-0.77

Correlation Coefficient

Konecranes Plc  YIT Oyj

Pay attention - limited upside

The 3 months correlation between Konecranes and YIT is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Konecranes Plc and YIT Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YIT 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 YIT Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YIT Oyj has no effect on the direction of Konecranes Plc i.e., Konecranes Plc and YIT Oyj go up and down completely randomly.

Pair Corralation between Konecranes Plc and YIT Oyj

Assuming the 90 days trading horizon Konecranes Plc is expected to generate 0.71 times more return on investment than YIT Oyj. However, Konecranes Plc is 1.4 times less risky than YIT Oyj. It trades about 0.14 of its potential returns per unit of risk. YIT Oyj is currently generating about -0.02 per unit of risk. If you would invest  6,175  in Konecranes Plc on December 21, 2024 and sell it today you would earn a total of  955.00  from holding Konecranes Plc or generate 15.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

Konecranes Plc  vs.  YIT 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.

YIT Oyj

Risk-Adjusted Performance

Very Weak

Over the last 90 days YIT Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, YIT Oyj is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Konecranes Plc and YIT Oyj

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

The idea behind Konecranes Plc and YIT 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.