Correlation Between Fortum Oyj and Auction Technology
Can any of the company-specific risk be diversified away by investing in both Fortum Oyj and Auction Technology 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 Fortum Oyj and Auction Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortum Oyj and Auction Technology Group, you can compare the effects of market volatilities on Fortum Oyj and Auction Technology 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 Fortum Oyj with a short position of Auction Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortum Oyj and Auction Technology.
Diversification Opportunities for Fortum Oyj and Auction Technology
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fortum and Auction is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Fortum Oyj and Auction Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auction Technology and Fortum 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 Fortum Oyj are associated (or correlated) with Auction Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auction Technology has no effect on the direction of Fortum Oyj i.e., Fortum Oyj and Auction Technology go up and down completely randomly.
Pair Corralation between Fortum Oyj and Auction Technology
Assuming the 90 days trading horizon Fortum Oyj is expected to generate 4.61 times less return on investment than Auction Technology. But when comparing it to its historical volatility, Fortum Oyj is 1.81 times less risky than Auction Technology. It trades about 0.07 of its potential returns per unit of risk. Auction Technology Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 44,150 in Auction Technology Group on August 30, 2024 and sell it today you would earn a total of 6,550 from holding Auction Technology Group or generate 14.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortum Oyj vs. Auction Technology Group
Performance |
| Timeline |
| Fortum Oyj |
| Auction Technology |
Fortum Oyj and Auction Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortum Oyj and Auction Technology
The main advantage of trading using opposite Fortum Oyj and Auction Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortum Oyj position performs unexpectedly, Auction Technology 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 Auction Technology will offset losses from the drop in Auction Technology's long position.| Fortum Oyj vs. Alliance Data Systems | Fortum Oyj vs. Charter Communications Cl | Fortum Oyj vs. Elmos Semiconductor SE | Fortum Oyj vs. Cairo Communication SpA |
| Auction Technology vs. Samsung Electronics Co | Auction Technology vs. Samsung Electronics Co | Auction Technology vs. Hyundai Motor | Auction Technology vs. Toyota Motor Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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