Correlation Between KONE Oyj and Viafin Service

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

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

Diversification Opportunities for KONE Oyj and Viafin Service

-0.79

Correlation Coefficient

KONE Oyj  Viafin Service

Pay attention - limited upside

The 3 months correlation between KONE and Viafin is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding KONE Oyj and Viafin Service Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viafin Service 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 Viafin Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viafin Service Oyj has no effect on the direction of KONE Oyj i.e., KONE Oyj and Viafin Service go up and down completely randomly.

Pair Corralation between KONE Oyj and Viafin Service

Assuming the 90 days trading horizon KONE Oyj is expected to under-perform the Viafin Service. But the stock apears to be less risky and, when comparing its historical volatility, KONE Oyj is 1.02 times less risky than Viafin Service. The stock trades about -0.27 of its potential returns per unit of risk. The Viafin Service Oyj is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest  1,960  in Viafin Service Oyj on October 8, 2024 and sell it today you would lose (60.00) from holding Viafin Service Oyj or give up 3.06% of portfolio value over 90 days.

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

KONE Oyj  vs.  Viafin Service Oyj

KONE Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KONE Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Viafin Service Oyj

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Viafin Service Oyj are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Viafin Service 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 Viafin Service

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

The idea behind KONE Oyj and Viafin Service 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.