Correlation Between TietoEVRY Corp and Konecranes Plc

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

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

Diversification Opportunities for TietoEVRY Corp and Konecranes Plc

0.54

Correlation Coefficient

TietoEVRY Corp  Konecranes Plc

Very weak diversification

The 3 months correlation between TietoEVRY and Konecranes is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding TietoEVRY Corp and Konecranes Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Konecranes Plc and TietoEVRY Corp 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 TietoEVRY Corp are associated (or correlated) with Konecranes Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Konecranes Plc has no effect on the direction of TietoEVRY Corp i.e., TietoEVRY Corp and Konecranes Plc go up and down completely randomly.

Pair Corralation between TietoEVRY Corp and Konecranes Plc

Assuming the 90 days trading horizon TietoEVRY Corp is expected to generate 1.23 times more return on investment than Konecranes Plc. However, TietoEVRY Corp is 1.23 times more volatile than Konecranes Plc. It trades about -0.08 of its potential returns per unit of risk. Konecranes Plc is currently generating about -0.41 per unit of risk. If you would invest  1,772  in TietoEVRY Corp on October 8, 2024 and sell it today you would lose (32.00) from holding TietoEVRY Corp or give up 1.81% of portfolio value over 90 days.

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

TietoEVRY Corp  vs.  Konecranes Plc

TietoEVRY Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TietoEVRY Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, TietoEVRY Corp is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Konecranes Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Konecranes Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with TietoEVRY Corp and Konecranes Plc

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

The idea behind TietoEVRY Corp and Konecranes Plc 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.