Correlation Between KONE Oyj and SBM Offshore

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

By analyzing existing cross correlation between KONE Oyj and SBM Offshore NV, you can compare the effects of market volatilities on KONE Oyj and SBM Offshore 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 SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of KONE Oyj and SBM Offshore.

Diversification Opportunities for KONE Oyj and SBM Offshore

0.54

Correlation Coefficient

KONE Oyj  SBM Offshore

Very weak diversification

The 3 months correlation between KONE and SBM is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding KONE Oyj and SBM Offshore NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM Offshore NV 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 SBM Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBM Offshore NV has no effect on the direction of KONE Oyj i.e., KONE Oyj and SBM Offshore go up and down completely randomly.

Pair Corralation between KONE Oyj and SBM Offshore

Assuming the 90 days trading horizon KONE Oyj is expected to generate 2.5 times less return on investment than SBM Offshore. In addition to that, KONE Oyj is 1.02 times more volatile than SBM Offshore NV. It trades about 0.11 of its total potential returns per unit of risk. SBM Offshore NV is currently generating about 0.29 per unit of volatility. If you would invest  1,790  in SBM Offshore NV on April 25, 2025 and sell it today you would earn a total of  458.00  from holding SBM Offshore NV or generate 25.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

KONE Oyj  vs.  SBM Offshore NV

KONE Oyj

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KONE Oyj are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, KONE Oyj may actually be approaching a critical reversion point that can send shares even higher in August 2025.

SBM Offshore NV

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SBM Offshore NV are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SBM Offshore unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KONE Oyj and SBM Offshore

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

The idea behind KONE Oyj and SBM Offshore NV 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.