Correlation Between CapMan Oyj and Wartsila Oyj
Can any of the company-specific risk be diversified away by investing in both CapMan Oyj and Wartsila 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 CapMan Oyj and Wartsila Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CapMan Oyj B and Wartsila Oyj Abp, you can compare the effects of market volatilities on CapMan Oyj and Wartsila 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 CapMan Oyj with a short position of Wartsila Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of CapMan Oyj and Wartsila Oyj.
Diversification Opportunities for CapMan Oyj and Wartsila Oyj
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CapMan and Wartsila is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding CapMan Oyj B and Wartsila Oyj Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wartsila Oyj Abp and CapMan 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 CapMan Oyj B are associated (or correlated) with Wartsila Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wartsila Oyj Abp has no effect on the direction of CapMan Oyj i.e., CapMan Oyj and Wartsila Oyj go up and down completely randomly.
Pair Corralation between CapMan Oyj and Wartsila Oyj
Assuming the 90 days trading horizon CapMan Oyj B is expected to under-perform the Wartsila Oyj. But the stock apears to be less risky and, when comparing its historical volatility, CapMan Oyj B is 1.21 times less risky than Wartsila Oyj. The stock trades about -0.04 of its potential returns per unit of risk. The Wartsila Oyj Abp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,047 in Wartsila Oyj Abp on August 31, 2024 and sell it today you would earn a total of 652.00 from holding Wartsila Oyj Abp or generate 62.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CapMan Oyj B vs. Wartsila Oyj Abp
Performance |
| Timeline |
| CapMan Oyj B |
| Wartsila Oyj Abp |
CapMan Oyj and Wartsila Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CapMan Oyj and Wartsila Oyj
The main advantage of trading using opposite CapMan Oyj and Wartsila Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CapMan Oyj position performs unexpectedly, Wartsila 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 Wartsila Oyj will offset losses from the drop in Wartsila Oyj's long position.| CapMan Oyj vs. Nordea Bank Abp | CapMan Oyj vs. Telia Company AB | CapMan Oyj vs. Fortum Oyj | CapMan Oyj vs. SSAB AB ser |
| Wartsila Oyj vs. Admicom Oyj | Wartsila Oyj vs. Talenom Oyj | Wartsila Oyj vs. Vincit Group Oyj | Wartsila Oyj vs. Harvia Oyj |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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