Correlation Between Wulff Yhtiot and Raute Oyj

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

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

Diversification Opportunities for Wulff Yhtiot and Raute Oyj

0.23

Correlation Coefficient

Wulff Yhtiot  Raute Oyj

Modest diversification

The 3 months correlation between Wulff and Raute is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Wulff Yhtiot Oy and Raute Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raute Oyj and Wulff Yhtiot 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 Wulff Yhtiot Oy are associated (or correlated) with Raute Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raute Oyj has no effect on the direction of Wulff Yhtiot i.e., Wulff Yhtiot and Raute Oyj go up and down completely randomly.

Pair Corralation between Wulff Yhtiot and Raute Oyj

Assuming the 90 days trading horizon Wulff Yhtiot is expected to generate 1.45 times less return on investment than Raute Oyj. But when comparing it to its historical volatility, Wulff Yhtiot Oy is 1.21 times less risky than Raute Oyj. It trades about 0.07 of its potential returns per unit of risk. Raute Oyj is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,200  in Raute Oyj on October 9, 2024 and sell it today you would earn a total of  110.00  from holding Raute Oyj or generate 9.17% return on investment over 90 days.

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

Wulff Yhtiot Oy  vs.  Raute Oyj

Wulff Yhtiot Oy

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wulff Yhtiot Oy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical indicators, Wulff Yhtiot may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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.

Pair Trading with Wulff Yhtiot and Raute Oyj

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

The idea behind Wulff Yhtiot Oy and Raute Oyj 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.