Correlation Between Alandsbanken Abp and Raute Oyj
Can any of the company-specific risk be diversified away by investing in both Alandsbanken Abp 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 Alandsbanken Abp and Raute Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alandsbanken Abp B and Raute Oyj, you can compare the effects of market volatilities on Alandsbanken Abp 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 Alandsbanken Abp with a short position of Raute Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alandsbanken Abp and Raute Oyj.
Diversification Opportunities for Alandsbanken Abp and Raute Oyj
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Alandsbanken and Raute is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Alandsbanken Abp B and Raute Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raute Oyj and Alandsbanken Abp 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 Alandsbanken Abp B 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 Alandsbanken Abp i.e., Alandsbanken Abp and Raute Oyj go up and down completely randomly.
Pair Corralation between Alandsbanken Abp and Raute Oyj
Assuming the 90 days trading horizon Alandsbanken Abp B is expected to under-perform the Raute Oyj. But the stock apears to be less risky and, when comparing its historical volatility, Alandsbanken Abp B is 2.04 times less risky than Raute Oyj. The stock trades about -0.01 of its potential returns per unit of risk. The Raute Oyj is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,250 in Raute Oyj on August 30, 2024 and sell it today you would earn a total of 50.00 from holding Raute Oyj or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Alandsbanken Abp B vs. Raute Oyj
Performance |
| Timeline |
| Alandsbanken Abp B |
| Raute Oyj |
Alandsbanken Abp and Raute Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alandsbanken Abp and Raute Oyj
The main advantage of trading using opposite Alandsbanken Abp and Raute Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alandsbanken Abp 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.| Alandsbanken Abp vs. Aktia Bank Abp | Alandsbanken Abp vs. Alandsbanken Abp A | Alandsbanken Abp vs. Oma Saastopankki Oyj | Alandsbanken Abp vs. CapMan Oyj B |
| Raute Oyj vs. Telefonaktiebolaget LM Ericsson | Raute Oyj vs. SSAB AB ser | Raute Oyj vs. SSAB AB ser | Raute Oyj vs. Telia Company AB |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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