Correlation Between Revenio and Ponsse Oyj

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

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

Diversification Opportunities for Revenio and Ponsse Oyj

0.66

Correlation Coefficient

Revenio  Ponsse Oyj

Poor diversification

The 3 months correlation between Revenio and Ponsse is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Revenio Group and Ponsse Oyj 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ponsse Oyj 1 and Revenio 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 Revenio Group are associated (or correlated) with Ponsse Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ponsse Oyj 1 has no effect on the direction of Revenio i.e., Revenio and Ponsse Oyj go up and down completely randomly.

Pair Corralation between Revenio and Ponsse Oyj

Assuming the 90 days trading horizon Revenio Group is expected to under-perform the Ponsse Oyj. In addition to that, Revenio is 1.43 times more volatile than Ponsse Oyj 1. It trades about -0.23 of its total potential returns per unit of risk. Ponsse Oyj 1 is currently generating about -0.12 per unit of volatility. If you would invest  2,210  in Ponsse Oyj 1 on October 17, 2024 and sell it today you would lose (200.00) from holding Ponsse Oyj 1 or give up 9.05% of portfolio value over 90 days.

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

Revenio Group  vs.  Ponsse Oyj 1

Revenio Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Revenio Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent 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.

Ponsse Oyj 1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ponsse Oyj 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Revenio and Ponsse Oyj

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

The idea behind Revenio Group and Ponsse Oyj 1 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 Transaction History module to view history of all your transactions and understand their impact on performance.