Correlation Between Kone Oyj and Kuehne Nagel

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

Diversification Opportunities for Kone Oyj and Kuehne Nagel

0.95

Correlation Coefficient

Kone Oyj  Kuehne Nagel

Almost no diversification

The 3 months correlation between Kone and Kuehne is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Kone Oyj ADR and Kuehne Nagel International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuehne Nagel Interna 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 Kuehne Nagel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuehne Nagel Interna has no effect on the direction of Kone Oyj i.e., Kone Oyj and Kuehne Nagel go up and down completely randomly.

Pair Corralation between Kone Oyj and Kuehne Nagel

Assuming the 90 days horizon Kone Oyj ADR is expected to generate 1.09 times more return on investment than Kuehne Nagel. However, Kone Oyj is 1.09 times more volatile than Kuehne Nagel International. It trades about -0.13 of its potential returns per unit of risk. Kuehne Nagel International is currently generating about -0.14 per unit of risk. If you would invest  2,785  in Kone Oyj ADR on October 26, 2024 and sell it today you would lose (289.00) from holding Kone Oyj ADR or give up 10.38% of portfolio value over 90 days.

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

Kone Oyj ADR  vs.  Kuehne Nagel International

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 latest unsteady performance, the Stock's forward-looking indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Kuehne Nagel Interna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kuehne Nagel International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental 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 Kuehne Nagel

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

The idea behind Kone Oyj ADR and Kuehne Nagel International 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.