Correlation Between Kempower Oyj and LeadDesk Oyj

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

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

Diversification Opportunities for Kempower Oyj and LeadDesk Oyj

0.25

Correlation Coefficient

Kempower Oyj  LeadDesk Oyj

Modest diversification

The 3 months correlation between Kempower and LeadDesk is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Kempower Oyj and LeadDesk Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LeadDesk Oyj and Kempower 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 Kempower Oyj are associated (or correlated) with LeadDesk Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LeadDesk Oyj has no effect on the direction of Kempower Oyj i.e., Kempower Oyj and LeadDesk Oyj go up and down completely randomly.

Pair Corralation between Kempower Oyj and LeadDesk Oyj

Assuming the 90 days trading horizon Kempower Oyj is expected to generate 1.66 times more return on investment than LeadDesk Oyj. However, Kempower Oyj is 1.66 times more volatile than LeadDesk Oyj. It trades about 0.13 of its potential returns per unit of risk. LeadDesk Oyj is currently generating about 0.03 per unit of risk. If you would invest  996.00  in Kempower Oyj on December 27, 2024 and sell it today you would earn a total of  311.00  from holding Kempower Oyj or generate 31.22% return on investment over 90 days.

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

Kempower Oyj  vs.  LeadDesk Oyj

Kempower Oyj

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kempower Oyj are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Kempower Oyj reported solid returns over the last few months and may actually be approaching a breakup point.

LeadDesk Oyj

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LeadDesk Oyj are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, LeadDesk Oyj is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Kempower Oyj and LeadDesk Oyj

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

The idea behind Kempower Oyj and LeadDesk 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.