Correlation Between KONE Oyj and Nokian Renkaat
Can any of the company-specific risk be diversified away by investing in both KONE Oyj and Nokian Renkaat 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 Nokian Renkaat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KONE Oyj and Nokian Renkaat Oyj, you can compare the effects of market volatilities on KONE Oyj and Nokian Renkaat 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 Nokian Renkaat. Check out your portfolio center. Please also check ongoing floating volatility patterns of KONE Oyj and Nokian Renkaat.
Diversification Opportunities for KONE Oyj and Nokian Renkaat
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between KONE and Nokian is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding KONE Oyj and Nokian Renkaat Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokian Renkaat 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 Nokian Renkaat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nokian Renkaat Oyj has no effect on the direction of KONE Oyj i.e., KONE Oyj and Nokian Renkaat go up and down completely randomly.
Pair Corralation between KONE Oyj and Nokian Renkaat
Assuming the 90 days trading horizon KONE Oyj is expected to under-perform the Nokian Renkaat. But the stock apears to be less risky and, when comparing its historical volatility, KONE Oyj is 1.17 times less risky than Nokian Renkaat. The stock trades about -0.27 of its potential returns per unit of risk. The Nokian Renkaat Oyj is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 755.00 in Nokian Renkaat Oyj on October 8, 2024 and sell it today you would lose (15.00) from holding Nokian Renkaat Oyj or give up 1.99% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
KONE Oyj vs. Nokian Renkaat Oyj
Performance |
Timeline |
KONE Oyj |
Nokian Renkaat Oyj |
KONE Oyj and Nokian Renkaat Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with KONE Oyj and Nokian Renkaat
The main advantage of trading using opposite KONE Oyj and Nokian Renkaat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KONE Oyj position performs unexpectedly, Nokian Renkaat 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 Nokian Renkaat will offset losses from the drop in Nokian Renkaat's long position.KONE Oyj vs. Sampo Oyj A | KONE Oyj vs. Fortum Oyj | KONE Oyj vs. UPM Kymmene Oyj | KONE Oyj vs. Nordea Bank Abp |
Nokian Renkaat vs. Fortum Oyj | Nokian Renkaat vs. Sampo Oyj A | Nokian Renkaat vs. Nordea Bank Abp | Nokian Renkaat vs. Wartsila Oyj Abp |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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