Correlation Between CapMan Oyj and Sitowise Group

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

Diversification Opportunities for CapMan Oyj and Sitowise Group

0.75

Correlation Coefficient

CapMan Oyj  Sitowise Group

Poor diversification

The 3 months correlation between CapMan and Sitowise is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding CapMan Oyj B and Sitowise Group Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sitowise Group 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 Sitowise Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sitowise Group Oyj has no effect on the direction of CapMan Oyj i.e., CapMan Oyj and Sitowise Group go up and down completely randomly.

Pair Corralation between CapMan Oyj and Sitowise Group

Assuming the 90 days trading horizon CapMan Oyj is expected to generate 12.81 times less return on investment than Sitowise Group. But when comparing it to its historical volatility, CapMan Oyj B is 2.28 times less risky than Sitowise Group. It trades about 0.01 of its potential returns per unit of risk. Sitowise Group Oyj is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  245.00  in Sitowise Group Oyj on September 5, 2024 and sell it today you would earn a total of  14.00  from holding Sitowise Group Oyj or generate 5.71% 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.  Sitowise Group 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 recent stock price disturbance, may contribute to short-term losses for the investors.

Sitowise Group Oyj

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sitowise Group Oyj are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Sitowise Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CapMan Oyj and Sitowise Group

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

The idea behind CapMan Oyj B and Sitowise Group 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.