Correlation Between Vaisala Oyj and Revenio

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

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

Diversification Opportunities for Vaisala Oyj and Revenio

0.33

Correlation Coefficient

Vaisala Oyj  Revenio

Weak diversification

The 3 months correlation between Vaisala and Revenio is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Vaisala Oyj A and Revenio Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revenio Group and Vaisala 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 Vaisala Oyj A are associated (or correlated) with Revenio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revenio Group has no effect on the direction of Vaisala Oyj i.e., Vaisala Oyj and Revenio go up and down completely randomly.

Pair Corralation between Vaisala Oyj and Revenio

Assuming the 90 days trading horizon Vaisala Oyj A is expected to generate 1.07 times more return on investment than Revenio. However, Vaisala Oyj is 1.07 times more volatile than Revenio Group. It trades about 0.09 of its potential returns per unit of risk. Revenio Group is currently generating about 0.0 per unit of risk. If you would invest  4,005  in Vaisala Oyj A on September 29, 2024 and sell it today you would earn a total of  850.00  from holding Vaisala Oyj A or generate 21.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.21%
Values	Daily Returns

Vaisala Oyj A  vs.  Revenio Group

Vaisala Oyj A

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Vaisala Oyj and Revenio

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

The idea behind Vaisala Oyj A and Revenio Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.