Correlation Between Spinnova and KONE Oyj

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

By analyzing existing cross correlation between Spinnova Oy and KONE Oyj, you can compare the effects of market volatilities on Spinnova and KONE Oyj 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 Spinnova with a short position of KONE Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spinnova and KONE Oyj.

Diversification Opportunities for Spinnova and KONE Oyj

0.59

Correlation Coefficient

Spinnova  KONE Oyj

Very weak diversification

The 3 months correlation between Spinnova and KONE is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Spinnova Oy and KONE Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KONE Oyj and Spinnova 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 Spinnova Oy are associated (or correlated) with KONE Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KONE Oyj has no effect on the direction of Spinnova i.e., Spinnova and KONE Oyj go up and down completely randomly.

Pair Corralation between Spinnova and KONE Oyj

Assuming the 90 days trading horizon Spinnova Oy is expected to under-perform the KONE Oyj. In addition to that, Spinnova is 2.67 times more volatile than KONE Oyj. It trades about -0.09 of its total potential returns per unit of risk. KONE Oyj is currently generating about -0.01 per unit of volatility. If you would invest  4,969  in KONE Oyj on September 12, 2024 and sell it today you would lose (77.00) from holding KONE Oyj or give up 1.55% of portfolio value over 90 days.

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

Spinnova Oy  vs.  KONE Oyj

Spinnova Oy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spinnova Oy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

KONE Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KONE Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, KONE Oyj is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Spinnova and KONE Oyj

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

The idea behind Spinnova Oy and KONE Oyj 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.