Correlation Between KONE Oyj and United Bankers

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

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

Diversification Opportunities for KONE Oyj and United Bankers

-0.68

Correlation Coefficient

KONE Oyj  United Bankers

Excellent diversification

The 3 months correlation between KONE and United is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding KONE Oyj and United Bankers Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Bankers 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 United Bankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Bankers Oyj has no effect on the direction of KONE Oyj i.e., KONE Oyj and United Bankers go up and down completely randomly.

Pair Corralation between KONE Oyj and United Bankers

Assuming the 90 days trading horizon KONE Oyj is expected to generate 0.66 times more return on investment than United Bankers. However, KONE Oyj is 1.51 times less risky than United Bankers. It trades about 0.17 of its potential returns per unit of risk. United Bankers Oyj is currently generating about 0.03 per unit of risk. If you would invest  4,544  in KONE Oyj on December 30, 2024 and sell it today you would earn a total of  616.00  from holding KONE Oyj or generate 13.56% return on investment over 90 days.

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

KONE Oyj  vs.  United Bankers 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 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, KONE Oyj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

United Bankers Oyj

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in United Bankers Oyj are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, United Bankers is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KONE Oyj and United Bankers

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

The idea behind KONE Oyj and United Bankers 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.