Correlation Between Outokumpu Oyj and Stora Enso
Can any of the company-specific risk be diversified away by investing in both Outokumpu Oyj and Stora Enso 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 Outokumpu Oyj and Stora Enso into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Outokumpu Oyj and Stora Enso Oyj, you can compare the effects of market volatilities on Outokumpu Oyj and Stora Enso 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 Outokumpu Oyj with a short position of Stora Enso. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outokumpu Oyj and Stora Enso.
Diversification Opportunities for Outokumpu Oyj and Stora Enso
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Outokumpu and Stora is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Outokumpu Oyj and Stora Enso Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stora Enso Oyj and Outokumpu 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 Outokumpu Oyj are associated (or correlated) with Stora Enso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stora Enso Oyj has no effect on the direction of Outokumpu Oyj i.e., Outokumpu Oyj and Stora Enso go up and down completely randomly.
Pair Corralation between Outokumpu Oyj and Stora Enso
Assuming the 90 days trading horizon Outokumpu Oyj is expected to generate 0.76 times more return on investment than Stora Enso. However, Outokumpu Oyj is 1.31 times less risky than Stora Enso. It trades about 0.05 of its potential returns per unit of risk. Stora Enso Oyj is currently generating about -0.09 per unit of risk. If you would invest 319.00 in Outokumpu Oyj on September 12, 2024 and sell it today you would earn a total of 12.00 from holding Outokumpu Oyj or generate 3.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Outokumpu Oyj vs. Stora Enso Oyj
Performance |
Timeline |
Outokumpu Oyj |
Stora Enso Oyj |
Outokumpu Oyj and Stora Enso Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Outokumpu Oyj and Stora Enso
The main advantage of trading using opposite Outokumpu Oyj and Stora Enso positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outokumpu Oyj position performs unexpectedly, Stora Enso 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 Stora Enso will offset losses from the drop in Stora Enso's long position.Outokumpu Oyj vs. UPM Kymmene Oyj | Outokumpu Oyj vs. Stora Enso Oyj | Outokumpu Oyj vs. Valmet Oyj | Outokumpu Oyj vs. Wartsila Oyj Abp |
Stora Enso vs. UPM Kymmene Oyj | Stora Enso vs. Valmet Oyj | Stora Enso vs. Wartsila Oyj Abp | Stora Enso vs. Outokumpu Oyj |
Check out your portfolio center.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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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