Correlation Between Hyster Yale and KION Group

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

By analyzing existing cross correlation between Hyster Yale Materials Handling and KION Group AG, you can compare the effects of market volatilities on Hyster Yale and KION Group 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 Hyster Yale with a short position of KION Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyster Yale and KION Group.

Diversification Opportunities for Hyster Yale and KION Group

0.39

Correlation Coefficient

Hyster Yale  KION Group

Weak diversification

The 3 months correlation between Hyster and KION is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Hyster Yale Materials Handling and KION Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KION Group AG and Hyster Yale 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 Hyster Yale Materials Handling are associated (or correlated) with KION Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KION Group AG has no effect on the direction of Hyster Yale i.e., Hyster Yale and KION Group go up and down completely randomly.

Pair Corralation between Hyster Yale and KION Group

Assuming the 90 days trading horizon Hyster Yale Materials Handling is expected to generate 0.93 times more return on investment than KION Group. However, Hyster Yale Materials Handling is 1.08 times less risky than KION Group. It trades about 0.11 of its potential returns per unit of risk. KION Group AG is currently generating about -0.06 per unit of risk. If you would invest  4,888  in Hyster Yale Materials Handling on September 12, 2024 and sell it today you would earn a total of  212.00  from holding Hyster Yale Materials Handling or generate 4.34% return on investment over 90 days.

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

Hyster Yale Materials Handling  vs.  KION Group AG

Hyster Yale Materials

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hyster Yale Materials Handling are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Hyster Yale is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

KION Group AG

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KION Group AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, KION Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hyster Yale and KION Group

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

The idea behind Hyster Yale Materials Handling and KION Group AG 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.