Correlation Between Cargotec Oyj and SRV Group
Can any of the company-specific risk be diversified away by investing in both Cargotec Oyj and SRV Group 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 Cargotec Oyj and SRV Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cargotec Oyj and SRV Group plc, you can compare the effects of market volatilities on Cargotec Oyj and SRV Group 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 Cargotec Oyj with a short position of SRV Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cargotec Oyj and SRV Group.
Diversification Opportunities for Cargotec Oyj and SRV Group
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cargotec and SRV is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Cargotec Oyj and SRV Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SRV Group plc and Cargotec 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 Cargotec Oyj are associated (or correlated) with SRV Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SRV Group plc has no effect on the direction of Cargotec Oyj i.e., Cargotec Oyj and SRV Group go up and down completely randomly.
Pair Corralation between Cargotec Oyj and SRV Group
Assuming the 90 days trading horizon Cargotec Oyj is expected to generate 1.06 times more return on investment than SRV Group. However, Cargotec Oyj is 1.06 times more volatile than SRV Group plc. It trades about 0.04 of its potential returns per unit of risk. SRV Group plc is currently generating about 0.03 per unit of risk. If you would invest 3,863 in Cargotec Oyj on August 27, 2024 and sell it today you would earn a total of 1,527 from holding Cargotec Oyj or generate 39.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cargotec Oyj vs. SRV Group plc
Performance |
| Timeline |
| Cargotec Oyj |
| SRV Group plc |
Cargotec Oyj and SRV Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cargotec Oyj and SRV Group
The main advantage of trading using opposite Cargotec Oyj and SRV Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cargotec Oyj position performs unexpectedly, SRV Group 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 SRV Group will offset losses from the drop in SRV Group's long position.| Cargotec Oyj vs. Aktia Bank Abp | Cargotec Oyj vs. Alandsbanken Abp B | Cargotec Oyj vs. Alandsbanken Abp A | Cargotec Oyj vs. Sampo Oyj A |
| SRV Group vs. YIT Oyj | SRV Group vs. Tokmanni Group Oyj | SRV Group vs. Outokumpu Oyj | SRV Group vs. Cargotec 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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