Correlation Between KONE Oyj and TietoEVRY Corp

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

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

Diversification Opportunities for KONE Oyj and TietoEVRY Corp

0.57

Correlation Coefficient

KONE Oyj  TietoEVRY Corp

Very weak diversification

The 3 months correlation between KONE and TietoEVRY is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding KONE Oyj and TietoEVRY Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TietoEVRY Corp 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 TietoEVRY Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TietoEVRY Corp has no effect on the direction of KONE Oyj i.e., KONE Oyj and TietoEVRY Corp go up and down completely randomly.

Pair Corralation between KONE Oyj and TietoEVRY Corp

Assuming the 90 days trading horizon KONE Oyj is expected to generate 0.83 times more return on investment than TietoEVRY Corp. However, KONE Oyj is 1.21 times less risky than TietoEVRY Corp. It trades about 0.14 of its potential returns per unit of risk. TietoEVRY Corp is currently generating about 0.07 per unit of risk. If you would invest  5,000  in KONE Oyj on December 4, 2024 and sell it today you would earn a total of  500.00  from holding KONE Oyj or generate 10.0% 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.  TietoEVRY Corp

KONE Oyj

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KONE Oyj are ranked lower than 11 (%) 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 April 2025.

TietoEVRY Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TietoEVRY Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, TietoEVRY Corp is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with KONE Oyj and TietoEVRY Corp

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

The idea behind KONE Oyj and TietoEVRY Corp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.