Correlation Between Spirax Sarco and KONE Oyj

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

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

Diversification Opportunities for Spirax Sarco and KONE Oyj

0.1

Correlation Coefficient

Spirax Sarco  KONE Oyj

Average diversification

The 3 months correlation between Spirax and KONE is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Spirax Sarco Engineering PLC and KONE Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KONE Oyj and Spirax Sarco 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 Spirax Sarco Engineering PLC 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 Spirax Sarco i.e., Spirax Sarco and KONE Oyj go up and down completely randomly.

Pair Corralation between Spirax Sarco and KONE Oyj

Assuming the 90 days horizon Spirax Sarco Engineering PLC is expected to under-perform the KONE Oyj. In addition to that, Spirax Sarco is 1.12 times more volatile than KONE Oyj. It trades about -0.03 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  4,970  in KONE Oyj on October 9, 2024 and sell it today you would earn a total of  205.00  from holding KONE Oyj or generate 4.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	81.85%
Values	Daily Returns

Spirax Sarco Engineering PLC  vs.  KONE Oyj

Spirax Sarco Enginee

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 latest fragile performance, the Stock's forward-looking indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Spirax Sarco and KONE Oyj

The main advantage of trading using opposite Spirax Sarco and KONE Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirax Sarco 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 Spirax Sarco Engineering PLC 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.

Check out your portfolio center.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.