Correlation Between FAIR ISAAC and Stora Enso

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

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

Diversification Opportunities for FAIR ISAAC and Stora Enso

-0.61

Correlation Coefficient

FAIR ISAAC  Stora Enso

Excellent diversification

The 3 months correlation between FAIR and Stora is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding FAIR ISAAC and Stora Enso Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stora Enso Oyj and FAIR ISAAC 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 FAIR ISAAC are associated (or correlated) with Stora Enso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stora Enso Oyj has no effect on the direction of FAIR ISAAC i.e., FAIR ISAAC and Stora Enso go up and down completely randomly.

Pair Corralation between FAIR ISAAC and Stora Enso

Assuming the 90 days trading horizon FAIR ISAAC is expected to under-perform the Stora Enso. In addition to that, FAIR ISAAC is 1.39 times more volatile than Stora Enso Oyj. It trades about -0.24 of its total potential returns per unit of risk. Stora Enso Oyj is currently generating about 0.27 per unit of volatility. If you would invest  934.00  in Stora Enso Oyj on October 23, 2024 and sell it today you would earn a total of  71.00  from holding Stora Enso Oyj or generate 7.6% return on investment over 90 days.

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

FAIR ISAAC  vs.  Stora Enso Oyj

FAIR ISAAC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FAIR ISAAC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, FAIR ISAAC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Stora Enso Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stora Enso Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with FAIR ISAAC and Stora Enso

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

The idea behind FAIR ISAAC and Stora Enso 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.