Correlation Between KONE Oyj and Admicom Oyj

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

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

Diversification Opportunities for KONE Oyj and Admicom Oyj

0.43

Correlation Coefficient

KONE Oyj  Admicom Oyj

Very weak diversification

The 3 months correlation between KONE and Admicom is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding KONE Oyj and Admicom Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Admicom Oyj and KONE Oyj 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 KONE Oyj are associated (or correlated) with Admicom Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Admicom Oyj has no effect on the direction of KONE Oyj i.e., KONE Oyj and Admicom Oyj go up and down completely randomly.

Pair Corralation between KONE Oyj and Admicom Oyj

Assuming the 90 days trading horizon KONE Oyj is expected to generate 1.42 times less return on investment than Admicom Oyj. But when comparing it to its historical volatility, KONE Oyj is 1.92 times less risky than Admicom Oyj. It trades about 0.15 of its potential returns per unit of risk. Admicom Oyj is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  4,642  in Admicom Oyj on December 31, 2024 and sell it today you would earn a total of  728.00  from holding Admicom Oyj or generate 15.68% return on investment over 90 days.

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

KONE Oyj  vs.  Admicom Oyj

KONE Oyj

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KONE Oyj are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, KONE Oyj may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Admicom Oyj

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Admicom Oyj are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Admicom Oyj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KONE Oyj and Admicom Oyj

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

The idea behind KONE Oyj and Admicom 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.

Check out your portfolio center.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.