Correlation Between Fodelia and Raisio Oyj

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

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

Diversification Opportunities for Fodelia and Raisio Oyj

0.36

Correlation Coefficient

Fodelia  Raisio Oyj

Weak diversification

The 3 months correlation between Fodelia and Raisio is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Fodelia and Raisio Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raisio Oyj and Fodelia 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 Fodelia are associated (or correlated) with Raisio Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raisio Oyj has no effect on the direction of Fodelia i.e., Fodelia and Raisio Oyj go up and down completely randomly.

Pair Corralation between Fodelia and Raisio Oyj

Assuming the 90 days trading horizon Fodelia is expected to generate 0.91 times more return on investment than Raisio Oyj. However, Fodelia is 1.1 times less risky than Raisio Oyj. It trades about -0.02 of its potential returns per unit of risk. Raisio Oyj is currently generating about -0.03 per unit of risk. If you would invest  618.00  in Fodelia on October 5, 2024 and sell it today you would lose (6.00) from holding Fodelia or give up 0.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.12%
Values	Daily Returns

Fodelia  vs.  Raisio Oyj

Fodelia

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fodelia are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent technical and fundamental indicators, Fodelia may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Raisio Oyj

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Raisio Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Raisio Oyj is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Fodelia and Raisio Oyj

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

The idea behind Fodelia and Raisio 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.

Check out your portfolio center.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.