Correlation Between Konecranes Plc and Exel Composites

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

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

Diversification Opportunities for Konecranes Plc and Exel Composites

-0.8

Correlation Coefficient

Konecranes Plc  Exel Composites

Pay attention - limited upside

The 3 months correlation between Konecranes and Exel is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Konecranes Plc and Exel Composites Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exel Composites 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 Exel Composites. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exel Composites Oyj has no effect on the direction of Konecranes Plc i.e., Konecranes Plc and Exel Composites go up and down completely randomly.

Pair Corralation between Konecranes Plc and Exel Composites

Assuming the 90 days trading horizon Konecranes Plc is expected to generate 0.43 times more return on investment than Exel Composites. However, Konecranes Plc is 2.31 times less risky than Exel Composites. It trades about 0.08 of its potential returns per unit of risk. Exel Composites Oyj is currently generating about -0.25 per unit of risk. If you would invest  4,788  in Konecranes Plc on January 31, 2024 and sell it today you would earn a total of  130.00  from holding Konecranes Plc or generate 2.72% return on investment over 90 days.

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

Konecranes Plc  vs.  Exel Composites Oyj

Konecranes Plc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Konecranes Plc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Konecranes Plc exhibited solid returns over the last few months and may actually be approaching a breakup point.

Exel Composites Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exel Composites Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Konecranes Plc and Exel Composites

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

The idea behind Konecranes Plc and Exel Composites 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.

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 Global Correlations module to find global opportunities by holding instruments from different markets.