Correlation Between CapMan Oyj and Evli Pankki

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

Diversification Opportunities for CapMan Oyj and Evli Pankki

0.66

Correlation Coefficient

CapMan Oyj  Evli Pankki

Poor diversification

The 3 months correlation between CapMan and Evli is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding CapMan Oyj B and Evli Pankki Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evli Pankki Oyj 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 Evli Pankki. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evli Pankki Oyj has no effect on the direction of CapMan Oyj i.e., CapMan Oyj and Evli Pankki go up and down completely randomly.

Pair Corralation between CapMan Oyj and Evli Pankki

Assuming the 90 days trading horizon CapMan Oyj is expected to generate 1.52 times less return on investment than Evli Pankki. In addition to that, CapMan Oyj is 1.11 times more volatile than Evli Pankki Oyj. It trades about 0.12 of its total potential returns per unit of risk. Evli Pankki Oyj is currently generating about 0.19 per unit of volatility. If you would invest  1,780  in Evli Pankki Oyj on October 5, 2024 and sell it today you would earn a total of  80.00  from holding Evli Pankki Oyj or generate 4.49% return on investment over 90 days.

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

CapMan Oyj B  vs.  Evli Pankki Oyj

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 current stock price disturbance, may contribute to short-term losses for the investors.

Evli Pankki Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evli Pankki Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Evli Pankki is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CapMan Oyj and Evli Pankki

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

The idea behind CapMan Oyj B and Evli Pankki 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.