Correlation Between Kamux Suomi and Herantis Pharma

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

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

Diversification Opportunities for Kamux Suomi and Herantis Pharma

0.21

Correlation Coefficient

Kamux Suomi  Herantis Pharma

Modest diversification

The 3 months correlation between Kamux and Herantis is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Kamux Suomi Oy and Herantis Pharma Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herantis Pharma Oyj and Kamux Suomi 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 Kamux Suomi Oy are associated (or correlated) with Herantis Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herantis Pharma Oyj has no effect on the direction of Kamux Suomi i.e., Kamux Suomi and Herantis Pharma go up and down completely randomly.

Pair Corralation between Kamux Suomi and Herantis Pharma

Assuming the 90 days trading horizon Kamux Suomi Oy is expected to generate 0.92 times more return on investment than Herantis Pharma. However, Kamux Suomi Oy is 1.09 times less risky than Herantis Pharma. It trades about -0.02 of its potential returns per unit of risk. Herantis Pharma Oyj is currently generating about -0.03 per unit of risk. If you would invest  263.00  in Kamux Suomi Oy on December 24, 2024 and sell it today you would lose (10.00) from holding Kamux Suomi Oy or give up 3.8% of portfolio value over 90 days.

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

Kamux Suomi Oy  vs.  Herantis Pharma Oyj

Kamux Suomi Oy

Risk-Adjusted Performance

Very Weak

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

Herantis Pharma Oyj

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Kamux Suomi and Herantis Pharma

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

The idea behind Kamux Suomi Oy and Herantis Pharma 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.