Correlation Between Tulikivi Oyj and Konecranes Plc

Can any of the company-specific risk be diversified away by investing in both Tulikivi 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 Tulikivi 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 Tulikivi Oyj A and Konecranes Plc, you can compare the effects of market volatilities on Tulikivi 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 Tulikivi Oyj with a short position of Konecranes Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tulikivi Oyj and Konecranes Plc.

Diversification Opportunities for Tulikivi Oyj and Konecranes Plc

-0.27

Correlation Coefficient

Tulikivi Oyj  Konecranes Plc

Very good diversification

The 3 months correlation between Tulikivi and Konecranes is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Tulikivi Oyj A and Konecranes Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Konecranes Plc and Tulikivi 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 Tulikivi Oyj A 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 Tulikivi Oyj i.e., Tulikivi Oyj and Konecranes Plc go up and down completely randomly.

Pair Corralation between Tulikivi Oyj and Konecranes Plc

Assuming the 90 days trading horizon Tulikivi Oyj A is expected to generate 1.12 times more return on investment than Konecranes Plc. However, Tulikivi Oyj is 1.12 times more volatile than Konecranes Plc. It trades about 0.3 of its potential returns per unit of risk. Konecranes Plc is currently generating about 0.08 per unit of risk. If you would invest  41.00  in Tulikivi Oyj A on January 31, 2024 and sell it today you would earn a total of  6.00  from holding Tulikivi Oyj A or generate 14.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Tulikivi Oyj A  vs.  Konecranes Plc

Tulikivi Oyj A

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tulikivi Oyj A are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Tulikivi Oyj is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Konecranes Plc

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Konecranes Plc are ranked lower than 18 (%) 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.

Pair Trading with Tulikivi Oyj and Konecranes Plc

The main advantage of trading using opposite Tulikivi Oyj and Konecranes Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tulikivi 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 Tulikivi Oyj A 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.