Correlation Between Wialan Technologies and KONE Oyj

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

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

Diversification Opportunities for Wialan Technologies and KONE Oyj

0.7

Correlation Coefficient

Wialan Technologies  KONE Oyj

Poor diversification

The 3 months correlation between Wialan and KONE is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Wialan Technologies and KONE Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KONE Oyj and Wialan Technologies 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 Wialan Technologies 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 Wialan Technologies i.e., Wialan Technologies and KONE Oyj go up and down completely randomly.

Pair Corralation between Wialan Technologies and KONE Oyj

Given the investment horizon of 90 days Wialan Technologies is expected to generate 5.84 times more return on investment than KONE Oyj. However, Wialan Technologies is 5.84 times more volatile than KONE Oyj. It trades about 0.07 of its potential returns per unit of risk. KONE Oyj is currently generating about 0.06 per unit of risk. If you would invest  0.06  in Wialan Technologies on September 4, 2024 and sell it today you would earn a total of  0.05  from holding Wialan Technologies or generate 83.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	85.83%
Values	Daily Returns

Wialan Technologies  vs.  KONE Oyj

Wialan Technologies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wialan Technologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Wialan Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

KONE Oyj

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KONE Oyj are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking indicators, KONE Oyj is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Wialan Technologies and KONE Oyj

The main advantage of trading using opposite Wialan Technologies and KONE Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wialan Technologies 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 Wialan Technologies 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 Transaction History module to view history of all your transactions and understand their impact on performance.