Correlation Between Kone Oyj and Ferrovial

Can any of the company-specific risk be diversified away by investing in both Kone Oyj and Ferrovial 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 Ferrovial 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 Ferrovial SA, you can compare the effects of market volatilities on Kone Oyj and Ferrovial 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 Ferrovial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kone Oyj and Ferrovial.

Diversification Opportunities for Kone Oyj and Ferrovial

0.24

Correlation Coefficient

Kone Oyj  Ferrovial

Modest diversification

The 3 months correlation between Kone and Ferrovial is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Kone Oyj ADR and Ferrovial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrovial SA 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 Ferrovial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrovial SA has no effect on the direction of Kone Oyj i.e., Kone Oyj and Ferrovial go up and down completely randomly.

Pair Corralation between Kone Oyj and Ferrovial

If you would invest  3,075  in Ferrovial SA on October 23, 2024 and sell it today you would earn a total of  0.00  from holding Ferrovial SA or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.67%
Values	Daily Returns

Kone Oyj ADR  vs.  Ferrovial SA

Kone Oyj ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kone Oyj ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward-looking indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ferrovial SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Kone Oyj and Ferrovial

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

The idea behind Kone Oyj ADR and Ferrovial SA 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.