Correlation Between Detection Technology and Remedy Entertainment

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

Diversification Opportunities for Detection Technology and Remedy Entertainment

0.3

Correlation Coefficient

Detection Technology  Remedy Entertainment

Weak diversification

The 3 months correlation between Detection and Remedy is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Detection Technology OY and Remedy Entertainment Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Remedy Entertainment Oyj 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 Remedy Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Remedy Entertainment Oyj has no effect on the direction of Detection Technology i.e., Detection Technology and Remedy Entertainment go up and down completely randomly.

Pair Corralation between Detection Technology and Remedy Entertainment

Assuming the 90 days trading horizon Detection Technology OY is expected to generate 0.84 times more return on investment than Remedy Entertainment. However, Detection Technology OY is 1.19 times less risky than Remedy Entertainment. It trades about 0.04 of its potential returns per unit of risk. Remedy Entertainment Oyj is currently generating about -0.01 per unit of risk. If you would invest  1,470  in Detection Technology OY on December 25, 2024 and sell it today you would earn a total of  55.00  from holding Detection Technology OY or generate 3.74% return on investment over 90 days.

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

Detection Technology OY  vs.  Remedy Entertainment Oyj

Detection Technology

Risk-Adjusted Performance

Insignificant

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

Remedy Entertainment Oyj

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Detection Technology and Remedy Entertainment

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

The idea behind Detection Technology OY and Remedy Entertainment 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .