Correlation Between CapMan Oyj and Detection Technology

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

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

Diversification Opportunities for CapMan Oyj and Detection Technology

0.84

Correlation Coefficient

CapMan Oyj  Detection Technology

Very poor diversification

The 3 months correlation between CapMan and Detection is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding CapMan Oyj B and Detection Technology OY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Detection Technology and CapMan 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 CapMan Oyj B are associated (or correlated) with Detection Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Detection Technology has no effect on the direction of CapMan Oyj i.e., CapMan Oyj and Detection Technology go up and down completely randomly.

Pair Corralation between CapMan Oyj and Detection Technology

Assuming the 90 days trading horizon CapMan Oyj is expected to generate 1.67 times less return on investment than Detection Technology. But when comparing it to its historical volatility, CapMan Oyj B is 1.77 times less risky than Detection Technology. It trades about 0.12 of its potential returns per unit of risk. Detection Technology OY is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,430  in Detection Technology OY on October 5, 2024 and sell it today you would earn a total of  65.00  from holding Detection Technology OY or generate 4.55% return on investment over 90 days.

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

CapMan Oyj B  vs.  Detection Technology OY

CapMan Oyj B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CapMan Oyj B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CapMan Oyj is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Detection Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Detection Technology OY 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 February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with CapMan Oyj and Detection Technology

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

The idea behind CapMan Oyj B and Detection Technology OY 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.