Correlation Between Azelio AB and Fortum Oyj
Can any of the company-specific risk be diversified away by investing in both Azelio AB and Fortum 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 Azelio AB and Fortum Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Azelio AB and Fortum Oyj, you can compare the effects of market volatilities on Azelio AB and Fortum 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 Azelio AB with a short position of Fortum Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azelio AB and Fortum Oyj.
Diversification Opportunities for Azelio AB and Fortum Oyj
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Azelio and Fortum is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Azelio AB and Fortum Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortum Oyj and Azelio AB 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 Azelio AB are associated (or correlated) with Fortum Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortum Oyj has no effect on the direction of Azelio AB i.e., Azelio AB and Fortum Oyj go up and down completely randomly.
Pair Corralation between Azelio AB and Fortum Oyj
Assuming the 90 days horizon Azelio AB is expected to generate 4.09 times more return on investment than Fortum Oyj. However, Azelio AB is 4.09 times more volatile than Fortum Oyj. It trades about 0.02 of its potential returns per unit of risk. Fortum Oyj is currently generating about 0.03 per unit of risk. If you would invest 89.00 in Azelio AB on October 24, 2024 and sell it today you would lose (86.00) from holding Azelio AB or give up 96.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 33.62% |
| Values | Daily Returns |
Azelio AB vs. Fortum Oyj
Performance |
| Timeline |
| Azelio AB |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Fortum Oyj |
Azelio AB and Fortum Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Azelio AB and Fortum Oyj
The main advantage of trading using opposite Azelio AB and Fortum Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Azelio AB position performs unexpectedly, Fortum 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 Fortum Oyj will offset losses from the drop in Fortum Oyj's long position.| Azelio AB vs. Astra Energy | Azelio AB vs. Alternus Energy Group | Azelio AB vs. American Security Resources | Azelio AB vs. Carnegie Clean Energy |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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