Correlation Between Ponsse Oyj and CapMan Oyj

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

By analyzing existing cross correlation between Ponsse Oyj 1 and CapMan Oyj B, you can compare the effects of market volatilities on Ponsse Oyj and CapMan 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 Ponsse Oyj with a short position of CapMan Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ponsse Oyj and CapMan Oyj.

Diversification Opportunities for Ponsse Oyj and CapMan Oyj

0.94

Correlation Coefficient

Ponsse Oyj  CapMan Oyj

Almost no diversification

The 3 months correlation between Ponsse and CapMan is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Ponsse Oyj 1 and CapMan Oyj B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapMan Oyj B and Ponsse 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 Ponsse Oyj 1 are associated (or correlated) with CapMan Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CapMan Oyj B has no effect on the direction of Ponsse Oyj i.e., Ponsse Oyj and CapMan Oyj go up and down completely randomly.

Pair Corralation between Ponsse Oyj and CapMan Oyj

Assuming the 90 days trading horizon Ponsse Oyj 1 is expected to generate 1.26 times more return on investment than CapMan Oyj. However, Ponsse Oyj is 1.26 times more volatile than CapMan Oyj B. It trades about 0.26 of its potential returns per unit of risk. CapMan Oyj B is currently generating about 0.16 per unit of risk. If you would invest  2,020  in Ponsse Oyj 1 on December 24, 2024 and sell it today you would earn a total of  750.00  from holding Ponsse Oyj 1 or generate 37.13% return on investment over 90 days.

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

Ponsse Oyj 1  vs.  CapMan Oyj B

Ponsse Oyj 1

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ponsse Oyj 1 are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Ponsse Oyj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

CapMan Oyj B

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CapMan Oyj B are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CapMan Oyj sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ponsse Oyj and CapMan Oyj

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

The idea behind Ponsse Oyj 1 and CapMan Oyj B 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.