Correlation Between CapMan Oyj and Raute Oyj

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

Diversification Opportunities for CapMan Oyj and Raute Oyj

0.24

Correlation Coefficient

CapMan Oyj  Raute Oyj

Modest diversification

The 3 months correlation between CapMan and Raute is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding CapMan Oyj B and Raute Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raute 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 Raute Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raute Oyj has no effect on the direction of CapMan Oyj i.e., CapMan Oyj and Raute Oyj go up and down completely randomly.

Pair Corralation between CapMan Oyj and Raute Oyj

Assuming the 90 days trading horizon CapMan Oyj is expected to generate 1.72 times less return on investment than Raute Oyj. In addition to that, CapMan Oyj is 1.19 times more volatile than Raute Oyj. It trades about 0.1 of its total potential returns per unit of risk. Raute Oyj is currently generating about 0.2 per unit of volatility. If you would invest  1,265  in Raute Oyj on October 23, 2024 and sell it today you would earn a total of  55.00  from holding Raute Oyj or generate 4.35% return on investment over 90 days.

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

CapMan Oyj B  vs.  Raute 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 latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Raute Oyj

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Raute Oyj are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Raute Oyj is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with CapMan Oyj and Raute Oyj

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

The idea behind CapMan Oyj B and Raute 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.