Correlation Between Admicom Oyj and Wartsila Oyj

Can any of the company-specific risk be diversified away by investing in both Admicom Oyj and Wartsila 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 Wartsila 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 Wartsila Oyj Abp, you can compare the effects of market volatilities on Admicom Oyj and Wartsila 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 Wartsila Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Admicom Oyj and Wartsila Oyj.

Diversification Opportunities for Admicom Oyj and Wartsila Oyj

0.74

Correlation Coefficient

Admicom Oyj  Wartsila Oyj

Poor diversification

The 3 months correlation between Admicom and Wartsila is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Admicom Oyj and Wartsila Oyj Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wartsila Oyj Abp 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 Wartsila Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wartsila Oyj Abp has no effect on the direction of Admicom Oyj i.e., Admicom Oyj and Wartsila Oyj go up and down completely randomly.

Pair Corralation between Admicom Oyj and Wartsila Oyj

Assuming the 90 days trading horizon Admicom Oyj is expected to generate 0.82 times more return on investment than Wartsila Oyj. However, Admicom Oyj is 1.23 times less risky than Wartsila Oyj. It trades about -0.02 of its potential returns per unit of risk. Wartsila Oyj Abp is currently generating about -0.09 per unit of risk. If you would invest  5,010  in Admicom Oyj on August 31, 2024 and sell it today you would lose (205.00) from holding Admicom Oyj or give up 4.09% of portfolio value over 90 days.

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

Admicom Oyj  vs.  Wartsila Oyj Abp

Admicom Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Admicom Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Admicom Oyj is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Wartsila Oyj Abp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Admicom Oyj and Wartsila Oyj

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

The idea behind Admicom Oyj and Wartsila Oyj Abp 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 Stocks Directory module to find actively traded stocks across global markets.