Correlation Between Konecranes Plc and Telia Company

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

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

Diversification Opportunities for Konecranes Plc and Telia Company

-0.02

Correlation Coefficient

Konecranes Plc  Telia Company

Good diversification

The 3 months correlation between Konecranes and Telia is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Konecranes Plc and Telia Company AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telia Company 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 Telia Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telia Company has no effect on the direction of Konecranes Plc i.e., Konecranes Plc and Telia Company go up and down completely randomly.

Pair Corralation between Konecranes Plc and Telia Company

Assuming the 90 days trading horizon Konecranes Plc is expected to generate 1.49 times more return on investment than Telia Company. However, Konecranes Plc is 1.49 times more volatile than Telia Company AB. It trades about 0.07 of its potential returns per unit of risk. Telia Company AB is currently generating about -0.13 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  430.00  from holding Konecranes Plc or generate 7.05% return on investment over 90 days.

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

Konecranes Plc  vs.  Telia Company AB

Konecranes Plc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Konecranes Plc are ranked lower than 5 (%) 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.

Telia Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telia Company AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential 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 Telia Company

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

The idea behind Konecranes Plc and Telia Company AB 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.