Correlation Between Goff Corp and KONE Oyj

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

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

Diversification Opportunities for Goff Corp and KONE Oyj

-0.24

Correlation Coefficient

Goff Corp  KONE Oyj

Very good diversification

The 3 months correlation between Goff and KONE is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Goff Corp and KONE Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KONE Oyj and Goff 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 Goff Corp 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 Goff Corp i.e., Goff Corp and KONE Oyj go up and down completely randomly.

Pair Corralation between Goff Corp and KONE Oyj

Given the investment horizon of 90 days Goff Corp is expected to generate 31.47 times more return on investment than KONE Oyj. However, Goff Corp is 31.47 times more volatile than KONE Oyj. It trades about 0.09 of its potential returns per unit of risk. KONE Oyj is currently generating about 0.06 per unit of risk. If you would invest  1.29  in Goff Corp on September 4, 2024 and sell it today you would lose (0.42) from holding Goff Corp or give up 32.56% of portfolio value over 90 days.

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

Goff Corp  vs.  KONE Oyj

Goff Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goff Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Goff Corp is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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 Goff Corp and KONE Oyj

The main advantage of trading using opposite Goff Corp and KONE Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goff Corp 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 Goff Corp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.