Correlation Between EQ Oyj and Aktia Bank

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

By analyzing existing cross correlation between eQ Oyj and Aktia Bank Abp, you can compare the effects of market volatilities on EQ Oyj and Aktia Bank 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 EQ Oyj with a short position of Aktia Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of EQ Oyj and Aktia Bank.

Diversification Opportunities for EQ Oyj and Aktia Bank

-0.29

Correlation Coefficient

EQ Oyj  Aktia Bank

Very good diversification

The 3 months correlation between EQV1V and Aktia is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding eQ Oyj and Aktia Bank Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aktia Bank Abp and EQ 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 eQ Oyj are associated (or correlated) with Aktia Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aktia Bank Abp has no effect on the direction of EQ Oyj i.e., EQ Oyj and Aktia Bank go up and down completely randomly.

Pair Corralation between EQ Oyj and Aktia Bank

Assuming the 90 days trading horizon eQ Oyj is expected to under-perform the Aktia Bank. In addition to that, EQ Oyj is 1.85 times more volatile than Aktia Bank Abp. It trades about -0.14 of its total potential returns per unit of risk. Aktia Bank Abp is currently generating about 0.38 per unit of volatility. If you would invest  910.00  in Aktia Bank Abp on October 23, 2024 and sell it today you would earn a total of  52.00  from holding Aktia Bank Abp or generate 5.71% return on investment over 90 days.

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

eQ Oyj  vs.  Aktia Bank Abp

eQ Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days eQ Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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.

Aktia Bank Abp

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aktia Bank Abp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Aktia Bank is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with EQ Oyj and Aktia Bank

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

The idea behind eQ Oyj and Aktia Bank Abp 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.