Correlation Between Konecranes Plc and Metsa Board

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

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

Diversification Opportunities for Konecranes Plc and Metsa Board

0.59

Correlation Coefficient

Konecranes Plc  Metsa Board

Very weak diversification

The 3 months correlation between Konecranes and Metsa is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Konecranes Plc and Metsa Board Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metsa Board 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 Metsa Board. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metsa Board Oyj has no effect on the direction of Konecranes Plc i.e., Konecranes Plc and Metsa Board go up and down completely randomly.

Pair Corralation between Konecranes Plc and Metsa Board

Assuming the 90 days trading horizon Konecranes Plc is expected to generate 1.03 times more return on investment than Metsa Board. However, Konecranes Plc is 1.03 times more volatile than Metsa Board Oyj. It trades about 0.1 of its potential returns per unit of risk. Metsa Board Oyj is currently generating about -0.05 per unit of risk. If you would invest  2,603  in Konecranes Plc on September 28, 2024 and sell it today you would earn a total of  3,587  from holding Konecranes Plc or generate 137.8% return on investment over 90 days.

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

Konecranes Plc  vs.  Metsa Board Oyj

Konecranes Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Konecranes Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Metsa Board Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metsa Board Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Konecranes Plc and Metsa Board

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

The idea behind Konecranes Plc and Metsa Board 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.