Correlation Between Kone Oyj and Dear Cashmere

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

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

Diversification Opportunities for Kone Oyj and Dear Cashmere

-0.64

Correlation Coefficient

Kone Oyj  Dear Cashmere

Excellent diversification

The 3 months correlation between Kone and Dear is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Kone Oyj ADR and Dear Cashmere Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dear Cashmere Holding 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 ADR are associated (or correlated) with Dear Cashmere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dear Cashmere Holding has no effect on the direction of Kone Oyj i.e., Kone Oyj and Dear Cashmere go up and down completely randomly.

Pair Corralation between Kone Oyj and Dear Cashmere

Assuming the 90 days horizon Kone Oyj ADR is expected to generate 0.12 times more return on investment than Dear Cashmere. However, Kone Oyj ADR is 8.14 times less risky than Dear Cashmere. It trades about 0.16 of its potential returns per unit of risk. Dear Cashmere Holding is currently generating about -0.06 per unit of risk. If you would invest  2,460  in Kone Oyj ADR on December 27, 2024 and sell it today you would earn a total of  349.00  from holding Kone Oyj ADR or generate 14.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Kone Oyj ADR  vs.  Dear Cashmere Holding

Kone Oyj ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kone Oyj ADR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady forward-looking indicators, Kone Oyj showed solid returns over the last few months and may actually be approaching a breakup point.

Dear Cashmere Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dear Cashmere Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Kone Oyj and Dear Cashmere

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

The idea behind Kone Oyj ADR and Dear Cashmere Holding 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..