Correlation Between Vaisala Oyj and KONE Oyj

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

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

Diversification Opportunities for Vaisala Oyj and KONE Oyj

-0.3

Correlation Coefficient

Vaisala Oyj  KONE Oyj

Very good diversification

The 3 months correlation between Vaisala and KONE is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Vaisala Oyj A and KONE Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KONE Oyj and Vaisala 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 Vaisala Oyj A 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 Vaisala Oyj i.e., Vaisala Oyj and KONE Oyj go up and down completely randomly.

Pair Corralation between Vaisala Oyj and KONE Oyj

Assuming the 90 days trading horizon Vaisala Oyj A is expected to generate 3.39 times more return on investment than KONE Oyj. However, Vaisala Oyj is 3.39 times more volatile than KONE Oyj. It trades about 0.23 of its potential returns per unit of risk. KONE Oyj is currently generating about -0.01 per unit of risk. If you would invest  4,815  in Vaisala Oyj A on October 22, 2024 and sell it today you would earn a total of  485.00  from holding Vaisala Oyj A or generate 10.07% return on investment over 90 days.

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

Vaisala Oyj A  vs.  KONE Oyj

Vaisala Oyj A

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vaisala Oyj A are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Vaisala Oyj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Vaisala Oyj and KONE Oyj

The main advantage of trading using opposite Vaisala Oyj and KONE Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vaisala Oyj 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 Vaisala Oyj A 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.