Correlation Between Admicom Oyj and Harvia Oyj

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

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

Diversification Opportunities for Admicom Oyj and Harvia Oyj

0.88

Correlation Coefficient

Admicom Oyj  Harvia Oyj

Very poor diversification

The 3 months correlation between Admicom and Harvia is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Admicom Oyj and Harvia Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvia Oyj and Admicom 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 Admicom Oyj are associated (or correlated) with Harvia Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvia Oyj has no effect on the direction of Admicom Oyj i.e., Admicom Oyj and Harvia Oyj go up and down completely randomly.

Pair Corralation between Admicom Oyj and Harvia Oyj

Assuming the 90 days trading horizon Admicom Oyj is expected to generate 1.1 times more return on investment than Harvia Oyj. However, Admicom Oyj is 1.1 times more volatile than Harvia Oyj. It trades about 0.11 of its potential returns per unit of risk. Harvia Oyj is currently generating about 0.06 per unit of risk. If you would invest  4,805  in Admicom Oyj on November 29, 2024 and sell it today you would earn a total of  605.00  from holding Admicom Oyj or generate 12.59% return on investment over 90 days.

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

Admicom Oyj  vs.  Harvia Oyj

Admicom Oyj

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Admicom Oyj are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Admicom Oyj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Harvia Oyj

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Harvia Oyj are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Harvia Oyj may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Admicom Oyj and Harvia Oyj

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

The idea behind Admicom Oyj and Harvia 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.