Correlation Between Raisio Oyj and Fodelia

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

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

Diversification Opportunities for Raisio Oyj and Fodelia

0.34

Correlation Coefficient

Raisio Oyj  Fodelia

Weak diversification

The 3 months correlation between Raisio and Fodelia is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Raisio Oyj and Fodelia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fodelia and Raisio 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 Raisio Oyj are associated (or correlated) with Fodelia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fodelia has no effect on the direction of Raisio Oyj i.e., Raisio Oyj and Fodelia go up and down completely randomly.

Pair Corralation between Raisio Oyj and Fodelia

Assuming the 90 days trading horizon Raisio Oyj is expected to generate 4.23 times less return on investment than Fodelia. In addition to that, Raisio Oyj is 1.11 times more volatile than Fodelia. It trades about 0.01 of its total potential returns per unit of risk. Fodelia is currently generating about 0.05 per unit of volatility. If you would invest  432.00  in Fodelia on October 3, 2024 and sell it today you would earn a total of  184.00  from holding Fodelia or generate 42.59% return on investment over 90 days.

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

Raisio Oyj  vs.  Fodelia

Raisio Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raisio Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Raisio Oyj is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Fodelia

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fodelia are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Fodelia is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Raisio Oyj and Fodelia

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

The idea behind Raisio Oyj and Fodelia 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.