Correlation Between KION Group and PACCAR

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

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

Diversification Opportunities for KION Group and PACCAR

-0.33

Correlation Coefficient

KION Group  PACCAR

Very good diversification

The 3 months correlation between KION and PACCAR is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding KION Group AG and PACCAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACCAR Inc and KION Group 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 KION Group AG are associated (or correlated) with PACCAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACCAR Inc has no effect on the direction of KION Group i.e., KION Group and PACCAR go up and down completely randomly.

Pair Corralation between KION Group and PACCAR

Assuming the 90 days horizon KION Group AG is expected to under-perform the PACCAR. In addition to that, KION Group is 1.07 times more volatile than PACCAR Inc. It trades about -0.14 of its total potential returns per unit of risk. PACCAR Inc is currently generating about 0.06 per unit of volatility. If you would invest  9,582  in PACCAR Inc on September 27, 2024 and sell it today you would earn a total of  458.00  from holding PACCAR Inc or generate 4.78% return on investment over 90 days.

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

KION Group AG  vs.  PACCAR Inc

KION Group AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KION Group AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

PACCAR Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PACCAR Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PACCAR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KION Group and PACCAR

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

The idea behind KION Group AG and PACCAR Inc 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 Stocks Directory module to find actively traded stocks across global markets.