Correlation Between KONE Oyj and Siemens AG

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

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

Diversification Opportunities for KONE Oyj and Siemens AG

0.0

Correlation Coefficient

KONE Oyj  Siemens AG

Pay attention - limited upside

The 3 months correlation between KONE and Siemens is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding KONE Oyj and Siemens AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens AG ADR 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 Siemens AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens AG ADR has no effect on the direction of KONE Oyj i.e., KONE Oyj and Siemens AG go up and down completely randomly.

Pair Corralation between KONE Oyj and Siemens AG

If you would invest  5,175  in KONE Oyj on December 29, 2024 and sell it today you would earn a total of  240.00  from holding KONE Oyj or generate 4.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

KONE Oyj  vs.  Siemens AG ADR

KONE Oyj

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KONE Oyj are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking indicators, KONE Oyj is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Siemens AG ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Siemens AG ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Siemens AG is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KONE Oyj and Siemens AG

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

The idea behind KONE Oyj and Siemens AG ADR 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.