Correlation Between Metsa Board and LeadDesk Oyj

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

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

Diversification Opportunities for Metsa Board and LeadDesk Oyj

0.59

Correlation Coefficient

Metsa Board  LeadDesk Oyj

Very weak diversification

The 3 months correlation between Metsa and LeadDesk is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Metsa Board Oyj and LeadDesk Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LeadDesk Oyj and Metsa Board 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 Metsa Board 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 Metsa Board i.e., Metsa Board and LeadDesk Oyj go up and down completely randomly.

Pair Corralation between Metsa Board and LeadDesk Oyj

Assuming the 90 days trading horizon Metsa Board is expected to generate 1.34 times less return on investment than LeadDesk Oyj. But when comparing it to its historical volatility, Metsa Board Oyj is 1.24 times less risky than LeadDesk Oyj. It trades about 0.31 of its potential returns per unit of risk. LeadDesk Oyj is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  614.00  in LeadDesk Oyj on October 23, 2024 and sell it today you would earn a total of  80.00  from holding LeadDesk Oyj or generate 13.03% return on investment over 90 days.

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

Metsa Board Oyj  vs.  LeadDesk Oyj

Metsa Board Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metsa Board Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

LeadDesk Oyj

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days LeadDesk Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Metsa Board and LeadDesk Oyj

The main advantage of trading using opposite Metsa Board and LeadDesk Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metsa Board 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 Metsa Board 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.