Correlation Between Astra Energy and Fortum Oyj

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

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

Diversification Opportunities for Astra Energy and Fortum Oyj

0.49

Correlation Coefficient

Astra Energy  Fortum Oyj

Very weak diversification

The 3 months correlation between Astra and Fortum is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Astra Energy and Fortum Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortum Oyj and Astra Energy 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 Astra Energy are associated (or correlated) with Fortum Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortum Oyj has no effect on the direction of Astra Energy i.e., Astra Energy and Fortum Oyj go up and down completely randomly.

Pair Corralation between Astra Energy and Fortum Oyj

Given the investment horizon of 90 days Astra Energy is expected to under-perform the Fortum Oyj. In addition to that, Astra Energy is 3.07 times more volatile than Fortum Oyj. It trades about -0.01 of its total potential returns per unit of risk. Fortum Oyj is currently generating about 0.07 per unit of volatility. If you would invest  1,110  in Fortum Oyj on September 12, 2024 and sell it today you would earn a total of  402.00  from holding Fortum Oyj or generate 36.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	62.12%
Values	Daily Returns

Astra Energy  vs.  Fortum Oyj

Astra Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astra Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Fortum Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortum Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Fortum Oyj is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Astra Energy and Fortum Oyj

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

The idea behind Astra Energy and Fortum 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.