Correlation Between EQ Oyj and Musti Group
Can any of the company-specific risk be diversified away by investing in both EQ Oyj and Musti 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 EQ Oyj and Musti Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between eQ Oyj and Musti Group Oyj, you can compare the effects of market volatilities on EQ Oyj and Musti 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 EQ Oyj with a short position of Musti Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of EQ Oyj and Musti Group.
Diversification Opportunities for EQ Oyj and Musti Group
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between EQV1V and Musti is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding eQ Oyj and Musti Group Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Musti Group Oyj and EQ 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 eQ Oyj are associated (or correlated) with Musti Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Musti Group Oyj has no effect on the direction of EQ Oyj i.e., EQ Oyj and Musti Group go up and down completely randomly.
Pair Corralation between EQ Oyj and Musti Group
Assuming the 90 days trading horizon eQ Oyj is expected to generate 0.59 times more return on investment than Musti Group. However, eQ Oyj is 1.69 times less risky than Musti Group. It trades about -0.25 of its potential returns per unit of risk. Musti Group Oyj is currently generating about -0.19 per unit of risk. If you would invest 1,355 in eQ Oyj on September 1, 2024 and sell it today you would lose (95.00) from holding eQ Oyj or give up 7.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
eQ Oyj vs. Musti Group Oyj
Performance |
| Timeline |
| eQ Oyj |
| Musti Group Oyj |
EQ Oyj and Musti Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EQ Oyj and Musti Group
The main advantage of trading using opposite EQ Oyj and Musti Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EQ Oyj position performs unexpectedly, Musti 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 Musti Group will offset losses from the drop in Musti Group's long position.The idea behind eQ Oyj and Musti Group Oyj pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Musti Group vs. Harvia Oyj | Musti Group vs. Tokmanni Group Oyj | Musti Group vs. Kamux Suomi Oy | Musti Group vs. Revenio Group |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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