Correlation Between Tokmanni Group and Konecranes Plc

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

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

Diversification Opportunities for Tokmanni Group and Konecranes Plc

-0.62

Correlation Coefficient

Tokmanni Group  Konecranes Plc

Excellent diversification

The 3 months correlation between Tokmanni and Konecranes is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Tokmanni Group Oyj and Konecranes Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Konecranes Plc and Tokmanni Group 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 Tokmanni Group 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 Tokmanni Group i.e., Tokmanni Group and Konecranes Plc go up and down completely randomly.

Pair Corralation between Tokmanni Group and Konecranes Plc

Assuming the 90 days trading horizon Tokmanni Group Oyj is expected to under-perform the Konecranes Plc. In addition to that, Tokmanni Group is 1.32 times more volatile than Konecranes Plc. It trades about -0.1 of its total potential returns per unit of risk. Konecranes Plc is currently generating about 0.18 per unit of volatility. If you would invest  4,631  in Konecranes Plc on February 29, 2024 and sell it today you would earn a total of  769.00  from holding Konecranes Plc or generate 16.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Tokmanni Group Oyj  vs.  Konecranes Plc

Tokmanni Group Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tokmanni Group Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic 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

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Konecranes Plc are ranked lower than 13 (%) 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 Tokmanni Group and Konecranes Plc

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

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.