Correlation Between Fortum Oyj and Clean Vision

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

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

Diversification Opportunities for Fortum Oyj and Clean Vision

-0.64

Correlation Coefficient

Fortum Oyj  Clean Vision

Excellent diversification

The 3 months correlation between Fortum and Clean is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Fortum Oyj and Clean Vision Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Vision Corp and Fortum 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 Fortum Oyj are associated (or correlated) with Clean Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Vision Corp has no effect on the direction of Fortum Oyj i.e., Fortum Oyj and Clean Vision go up and down completely randomly.

Pair Corralation between Fortum Oyj and Clean Vision

Assuming the 90 days horizon Fortum Oyj is expected to generate 0.19 times more return on investment than Clean Vision. However, Fortum Oyj is 5.23 times less risky than Clean Vision. It trades about 0.15 of its potential returns per unit of risk. Clean Vision Corp is currently generating about 0.01 per unit of risk. If you would invest  1,430  in Fortum Oyj on December 28, 2024 and sell it today you would earn a total of  179.00  from holding Fortum Oyj or generate 12.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

Fortum Oyj  vs.  Clean Vision Corp

Fortum Oyj

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fortum Oyj are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Fortum Oyj reported solid returns over the last few months and may actually be approaching a breakup point.

Clean Vision Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clean Vision Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Clean Vision is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Fortum Oyj and Clean Vision

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

The idea behind Fortum Oyj and Clean Vision Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.