Correlation Between KONE Oyj and Sitowise Group

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

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

Diversification Opportunities for KONE Oyj and Sitowise Group

0.57

Correlation Coefficient

KONE Oyj  Sitowise Group

Very weak diversification

The 3 months correlation between KONE and Sitowise is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding KONE Oyj and Sitowise Group Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sitowise Group Oyj and KONE 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 KONE Oyj are associated (or correlated) with Sitowise Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sitowise Group Oyj has no effect on the direction of KONE Oyj i.e., KONE Oyj and Sitowise Group go up and down completely randomly.

Pair Corralation between KONE Oyj and Sitowise Group

Assuming the 90 days trading horizon KONE Oyj is expected to under-perform the Sitowise Group. But the stock apears to be less risky and, when comparing its historical volatility, KONE Oyj is 2.78 times less risky than Sitowise Group. The stock trades about -0.04 of its potential returns per unit of risk. The Sitowise Group Oyj is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  267.00  in Sitowise Group Oyj on September 16, 2024 and sell it today you would earn a total of  8.00  from holding Sitowise Group Oyj or generate 3.0% return on investment over 90 days.

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

KONE Oyj  vs.  Sitowise Group Oyj

KONE Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KONE Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, KONE Oyj is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Sitowise Group Oyj

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sitowise Group Oyj are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Sitowise Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with KONE Oyj and Sitowise Group

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

The idea behind KONE Oyj and Sitowise Group 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.