Correlation Between Kone Oyj and Geberit AG

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

Diversification Opportunities for Kone Oyj and Geberit AG

0.71

Correlation Coefficient

Kone Oyj  Geberit AG

Poor diversification

The 3 months correlation between Kone and Geberit is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Kone Oyj ADR and Geberit AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geberit 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 ADR are associated (or correlated) with Geberit AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geberit AG ADR has no effect on the direction of Kone Oyj i.e., Kone Oyj and Geberit AG go up and down completely randomly.

Pair Corralation between Kone Oyj and Geberit AG

Assuming the 90 days horizon Kone Oyj ADR is expected to under-perform the Geberit AG. But the pink sheet apears to be less risky and, when comparing its historical volatility, Kone Oyj ADR is 1.03 times less risky than Geberit AG. The pink sheet trades about 0.0 of its potential returns per unit of risk. The Geberit AG ADR is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  5,043  in Geberit AG ADR on October 11, 2024 and sell it today you would earn a total of  511.00  from holding Geberit AG ADR or generate 10.13% return on investment over 90 days.

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

Kone Oyj ADR  vs.  Geberit AG ADR

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.

Geberit AG ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Geberit AG ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Kone Oyj and Geberit AG

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

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