Correlation Between Kesko Oyj and Incap Oyj

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

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

Diversification Opportunities for Kesko Oyj and Incap Oyj

0.04

Correlation Coefficient

Kesko Oyj  Incap Oyj

Significant diversification

The 3 months correlation between Kesko and Incap is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Kesko Oyj and Incap Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Incap Oyj and Kesko 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 Kesko Oyj are associated (or correlated) with Incap Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Incap Oyj has no effect on the direction of Kesko Oyj i.e., Kesko Oyj and Incap Oyj go up and down completely randomly.

Pair Corralation between Kesko Oyj and Incap Oyj

Assuming the 90 days trading horizon Kesko Oyj is expected to generate 2.01 times less return on investment than Incap Oyj. But when comparing it to its historical volatility, Kesko Oyj is 1.67 times less risky than Incap Oyj. It trades about 0.08 of its potential returns per unit of risk. Incap Oyj is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,035  in Incap Oyj on December 31, 2024 and sell it today you would earn a total of  114.00  from holding Incap Oyj or generate 11.01% return on investment over 90 days.

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

Kesko Oyj  vs.  Incap Oyj

Kesko Oyj

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kesko Oyj are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Kesko Oyj is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Incap Oyj

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Incap Oyj are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Incap Oyj may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with Kesko Oyj and Incap Oyj

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

The idea behind Kesko Oyj and Incap 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.