Correlation Between Konecranes Plc and Kemira Oyj

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

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

Diversification Opportunities for Konecranes Plc and Kemira Oyj

0.36

Correlation Coefficient

Konecranes Plc  Kemira Oyj

Weak diversification

The 3 months correlation between Konecranes and Kemira is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Konecranes Plc and Kemira Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kemira Oyj and Konecranes Plc 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 Konecranes Plc are associated (or correlated) with Kemira Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kemira Oyj has no effect on the direction of Konecranes Plc i.e., Konecranes Plc and Kemira Oyj go up and down completely randomly.

Pair Corralation between Konecranes Plc and Kemira Oyj

Assuming the 90 days trading horizon Konecranes Plc is expected to generate 1.25 times more return on investment than Kemira Oyj. However, Konecranes Plc is 1.25 times more volatile than Kemira Oyj. It trades about 0.08 of its potential returns per unit of risk. Kemira Oyj is currently generating about -0.1 per unit of risk. If you would invest  6,100  in Konecranes Plc on September 17, 2024 and sell it today you would earn a total of  475.00  from holding Konecranes Plc or generate 7.79% return on investment over 90 days.

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

Konecranes Plc  vs.  Kemira Oyj

Konecranes Plc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Konecranes Plc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Konecranes Plc may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kemira Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kemira Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Konecranes Plc and Kemira Oyj

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

The idea behind Konecranes Plc and Kemira 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.