Correlation Between Etteplan Oyj and Scanfil Oyj

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

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

Diversification Opportunities for Etteplan Oyj and Scanfil Oyj

-0.42

Correlation Coefficient

Etteplan Oyj  Scanfil Oyj

Very good diversification

The 3 months correlation between Etteplan and Scanfil is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Etteplan Oyj and Scanfil Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scanfil Oyj and Etteplan 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 Etteplan Oyj are associated (or correlated) with Scanfil Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scanfil Oyj has no effect on the direction of Etteplan Oyj i.e., Etteplan Oyj and Scanfil Oyj go up and down completely randomly.

Pair Corralation between Etteplan Oyj and Scanfil Oyj

Assuming the 90 days trading horizon Etteplan Oyj is expected to generate 1.14 times less return on investment than Scanfil Oyj. In addition to that, Etteplan Oyj is 1.33 times more volatile than Scanfil Oyj. It trades about 0.03 of its total potential returns per unit of risk. Scanfil Oyj is currently generating about 0.05 per unit of volatility. If you would invest  787.00  in Scanfil Oyj on October 25, 2024 and sell it today you would earn a total of  29.00  from holding Scanfil Oyj or generate 3.68% return on investment over 90 days.

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

Etteplan Oyj  vs.  Scanfil Oyj

Etteplan Oyj

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Etteplan Oyj are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Etteplan Oyj is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Scanfil Oyj

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Scanfil Oyj are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Scanfil Oyj is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Etteplan Oyj and Scanfil Oyj

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

The idea behind Etteplan Oyj and Scanfil 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.