Correlation Between Cargotec Oyj and Valmet Oyj
Can any of the company-specific risk be diversified away by investing in both Cargotec Oyj and Valmet 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 Cargotec Oyj and Valmet Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cargotec Oyj and Valmet Oyj, you can compare the effects of market volatilities on Cargotec Oyj and Valmet 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 Cargotec Oyj with a short position of Valmet Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cargotec Oyj and Valmet Oyj.
Diversification Opportunities for Cargotec Oyj and Valmet Oyj
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cargotec and Valmet is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Cargotec Oyj and Valmet Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valmet Oyj 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 Valmet Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valmet Oyj has no effect on the direction of Cargotec Oyj i.e., Cargotec Oyj and Valmet Oyj go up and down completely randomly.
Pair Corralation between Cargotec Oyj and Valmet Oyj
Assuming the 90 days trading horizon Cargotec Oyj is expected to generate 1.49 times more return on investment than Valmet Oyj. However, Cargotec Oyj is 1.49 times more volatile than Valmet Oyj. It trades about -0.11 of its potential returns per unit of risk. Valmet Oyj is currently generating about -0.19 per unit of risk. If you would invest 5,558 in Cargotec Oyj on September 1, 2024 and sell it today you would lose (296.00) from holding Cargotec Oyj or give up 5.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Cargotec Oyj vs. Valmet Oyj
Performance |
| Timeline |
| Cargotec Oyj |
| Valmet Oyj |
Cargotec Oyj and Valmet Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cargotec Oyj and Valmet Oyj
The main advantage of trading using opposite Cargotec Oyj and Valmet Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cargotec Oyj position performs unexpectedly, Valmet 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 Valmet Oyj will offset losses from the drop in Valmet Oyj's long position.| Cargotec Oyj vs. Admicom Oyj | Cargotec Oyj vs. Talenom Oyj | Cargotec Oyj vs. Vincit Group Oyj | Cargotec Oyj vs. Harvia Oyj |
| Valmet Oyj vs. Admicom Oyj | Valmet Oyj vs. Talenom Oyj | Valmet Oyj vs. Vincit Group Oyj | Valmet 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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