Correlation Between Fortum Oyj and Oma Saastopankki
Can any of the company-specific risk be diversified away by investing in both Fortum Oyj and Oma Saastopankki 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 Oma Saastopankki into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortum Oyj and Oma Saastopankki Oyj, you can compare the effects of market volatilities on Fortum Oyj and Oma Saastopankki 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 Oma Saastopankki. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortum Oyj and Oma Saastopankki.
Diversification Opportunities for Fortum Oyj and Oma Saastopankki
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Fortum and Oma is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Fortum Oyj and Oma Saastopankki Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oma Saastopankki Oyj 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 Oma Saastopankki. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oma Saastopankki Oyj has no effect on the direction of Fortum Oyj i.e., Fortum Oyj and Oma Saastopankki go up and down completely randomly.
Pair Corralation between Fortum Oyj and Oma Saastopankki
Assuming the 90 days trading horizon Fortum Oyj is expected to generate 0.62 times more return on investment than Oma Saastopankki. However, Fortum Oyj is 1.62 times less risky than Oma Saastopankki. It trades about 0.04 of its potential returns per unit of risk. Oma Saastopankki Oyj is currently generating about -0.16 per unit of risk. If you would invest 1,361 in Fortum Oyj on September 5, 2024 and sell it today you would earn a total of 51.00 from holding Fortum Oyj or generate 3.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Fortum Oyj vs. Oma Saastopankki Oyj
Performance |
Timeline |
Fortum Oyj |
Oma Saastopankki Oyj |
Fortum Oyj and Oma Saastopankki Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fortum Oyj and Oma Saastopankki
The main advantage of trading using opposite Fortum Oyj and Oma Saastopankki positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortum Oyj position performs unexpectedly, Oma Saastopankki 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 Oma Saastopankki will offset losses from the drop in Oma Saastopankki's long position.The idea behind Fortum Oyj and Oma Saastopankki 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.Oma Saastopankki vs. Sampo Oyj A | Oma Saastopankki vs. Fortum Oyj | Oma Saastopankki vs. UPM Kymmene Oyj | Oma Saastopankki vs. Neste Oil Oyj |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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