Correlation Between Kemira Oyj and Konecranes Plc

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

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

Diversification Opportunities for Kemira Oyj and Konecranes Plc

0.36

Correlation Coefficient

Kemira Oyj  Konecranes Plc

Weak diversification

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

Pair Corralation between Kemira Oyj and Konecranes Plc

Assuming the 90 days trading horizon Kemira Oyj is expected to under-perform the Konecranes Plc. But the stock apears to be less risky and, when comparing its historical volatility, Kemira Oyj is 1.25 times less risky than Konecranes Plc. The stock trades about -0.1 of its potential returns per unit of risk. The Konecranes Plc is currently generating about 0.08 of returns per unit of risk over similar time horizon. 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

Kemira Oyj  vs.  Konecranes Plc

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.

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.

Pair Trading with Kemira Oyj and Konecranes Plc

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

The idea behind Kemira Oyj and Konecranes Plc 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..