Correlation Between Alandsbanken Abp and CapMan Oyj

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

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

Diversification Opportunities for Alandsbanken Abp and CapMan Oyj

0.14

Correlation Coefficient

Alandsbanken Abp  CapMan Oyj

Average diversification

The 3 months correlation between Alandsbanken and CapMan is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Alandsbanken Abp B and CapMan Oyj B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapMan Oyj B and Alandsbanken Abp 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 Alandsbanken Abp B are associated (or correlated) with CapMan Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CapMan Oyj B has no effect on the direction of Alandsbanken Abp i.e., Alandsbanken Abp and CapMan Oyj go up and down completely randomly.

Pair Corralation between Alandsbanken Abp and CapMan Oyj

Assuming the 90 days trading horizon Alandsbanken Abp B is expected to under-perform the CapMan Oyj. But the stock apears to be less risky and, when comparing its historical volatility, Alandsbanken Abp B is 1.79 times less risky than CapMan Oyj. The stock trades about -0.06 of its potential returns per unit of risk. The CapMan Oyj B is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  178.00  in CapMan Oyj B on August 31, 2024 and sell it today you would earn a total of  5.00  from holding CapMan Oyj B or generate 2.81% return on investment over 90 days.

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

Alandsbanken Abp B  vs.  CapMan Oyj B

Alandsbanken Abp B

Risk-Adjusted Performance

0 of 100

Very Weak

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

CapMan Oyj B

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Alandsbanken Abp and CapMan Oyj

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

The idea behind Alandsbanken Abp B and CapMan Oyj B 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.