Correlation Between Harvia Oyj and CapMan Oyj

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

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

Diversification Opportunities for Harvia Oyj and CapMan Oyj

0.64

Correlation Coefficient

Harvia Oyj  CapMan Oyj

Poor diversification

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

Pair Corralation between Harvia Oyj and CapMan Oyj

Assuming the 90 days trading horizon Harvia Oyj is expected to under-perform the CapMan Oyj. In addition to that, Harvia Oyj is 1.04 times more volatile than CapMan Oyj B. It trades about -0.04 of its total potential returns per unit of risk. CapMan Oyj B is currently generating about -0.04 per unit of volatility. If you would invest  178.00  in CapMan Oyj B on October 3, 2024 and sell it today you would lose (7.00) from holding CapMan Oyj B or give up 3.93% of portfolio value over 90 days.

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

Harvia Oyj  vs.  CapMan Oyj B

Harvia Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harvia Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Harvia Oyj is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

CapMan Oyj B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CapMan Oyj B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CapMan Oyj is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Harvia Oyj and CapMan Oyj

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

The idea behind Harvia Oyj and CapMan Oyj B 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.