Correlation Between Trainers House and Ponsse Oyj

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

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

Diversification Opportunities for Trainers House and Ponsse Oyj

0.56

Correlation Coefficient

Trainers House  Ponsse Oyj

Very weak diversification

The 3 months correlation between Trainers and Ponsse is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Trainers House Oyj 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 Trainers House 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 Trainers House Oyj 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 Trainers House i.e., Trainers House and Ponsse Oyj go up and down completely randomly.

Pair Corralation between Trainers House and Ponsse Oyj

Assuming the 90 days trading horizon Trainers House Oyj is expected to generate 2.24 times more return on investment than Ponsse Oyj. However, Trainers House is 2.24 times more volatile than Ponsse Oyj 1. It trades about -0.03 of its potential returns per unit of risk. Ponsse Oyj 1 is currently generating about -0.07 per unit of risk. If you would invest  227.00  in Trainers House Oyj on September 30, 2024 and sell it today you would lose (17.00) from holding Trainers House Oyj or give up 7.49% of portfolio value over 90 days.

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

Trainers House Oyj  vs.  Ponsse Oyj 1

Trainers House Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Trainers House and Ponsse Oyj

The main advantage of trading using opposite Trainers House and Ponsse Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trainers House 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 Trainers House Oyj 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.