Correlation Between Raute Oyj and Biohit Oyj

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

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

Diversification Opportunities for Raute Oyj and Biohit Oyj

-0.18

Correlation Coefficient

Raute Oyj  Biohit Oyj

Good diversification

The 3 months correlation between Raute and Biohit is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Raute Oyj and Biohit Oyj B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biohit Oyj B and Raute 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 Raute Oyj are associated (or correlated) with Biohit Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biohit Oyj B has no effect on the direction of Raute Oyj i.e., Raute Oyj and Biohit Oyj go up and down completely randomly.

Pair Corralation between Raute Oyj and Biohit Oyj

Assuming the 90 days trading horizon Raute Oyj is expected to generate 0.74 times more return on investment than Biohit Oyj. However, Raute Oyj is 1.34 times less risky than Biohit Oyj. It trades about 0.04 of its potential returns per unit of risk. Biohit Oyj B is currently generating about 0.02 per unit of risk. If you would invest  1,285  in Raute Oyj on October 9, 2024 and sell it today you would earn a total of  25.00  from holding Raute Oyj or generate 1.95% return on investment over 90 days.

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

Raute Oyj  vs.  Biohit Oyj B

Raute Oyj

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Raute Oyj are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Raute Oyj may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Biohit Oyj B

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Biohit Oyj B are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Biohit Oyj is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Raute Oyj and Biohit Oyj

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

The idea behind Raute Oyj and Biohit 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.

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.