Correlation Between Afarak Group and Bittium Oyj
Can any of the company-specific risk be diversified away by investing in both Afarak Group and Bittium 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 Afarak Group and Bittium Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afarak Group Oyj and Bittium Oyj, you can compare the effects of market volatilities on Afarak Group and Bittium 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 Afarak Group with a short position of Bittium Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afarak Group and Bittium Oyj.
Diversification Opportunities for Afarak Group and Bittium Oyj
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Afarak and Bittium is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Afarak Group Oyj and Bittium Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bittium Oyj and Afarak Group 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 Afarak Group Oyj are associated (or correlated) with Bittium Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bittium Oyj has no effect on the direction of Afarak Group i.e., Afarak Group and Bittium Oyj go up and down completely randomly.
Pair Corralation between Afarak Group and Bittium Oyj
Assuming the 90 days trading horizon Afarak Group Oyj is expected to under-perform the Bittium Oyj. But the stock apears to be less risky and, when comparing its historical volatility, Afarak Group Oyj is 1.04 times less risky than Bittium Oyj. The stock trades about -0.05 of its potential returns per unit of risk. The Bittium Oyj is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 391.00 in Bittium Oyj on September 3, 2024 and sell it today you would earn a total of 299.00 from holding Bittium Oyj or generate 76.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Afarak Group Oyj vs. Bittium Oyj
Performance |
| Timeline |
| Afarak Group Oyj |
| Bittium Oyj |
Afarak Group and Bittium Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Afarak Group and Bittium Oyj
The main advantage of trading using opposite Afarak Group and Bittium Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afarak Group position performs unexpectedly, Bittium 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 Bittium Oyj will offset losses from the drop in Bittium Oyj's long position.| Afarak Group vs. Outokumpu Oyj | Afarak Group vs. Sotkamo Silver AB | Afarak Group vs. SSAB AB ser | Afarak Group vs. Bittium Oyj |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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