Correlation Between Detection Technology and CapMan Oyj

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

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

Diversification Opportunities for Detection Technology and CapMan Oyj

0.84

Correlation Coefficient

Detection Technology  CapMan Oyj

Very poor diversification

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

Pair Corralation between Detection Technology and CapMan Oyj

Assuming the 90 days trading horizon Detection Technology OY is expected to generate 1.77 times more return on investment than CapMan Oyj. However, Detection Technology is 1.77 times more volatile than CapMan Oyj B. It trades about 0.11 of its potential returns per unit of risk. CapMan Oyj B is currently generating about 0.12 per unit of risk. 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

Detection Technology OY  vs.  CapMan Oyj B

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.

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.

Pair Trading with Detection Technology and CapMan Oyj

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

The idea behind Detection Technology OY and CapMan Oyj B 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.