Correlation Between EQ Oyj and Suominen Oyj
Can any of the company-specific risk be diversified away by investing in both EQ Oyj and Suominen 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 EQ Oyj and Suominen Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between eQ Oyj and Suominen Oyj, you can compare the effects of market volatilities on EQ Oyj and Suominen 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 EQ Oyj with a short position of Suominen Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of EQ Oyj and Suominen Oyj.
Diversification Opportunities for EQ Oyj and Suominen Oyj
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between EQV1V and Suominen is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding eQ Oyj and Suominen Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suominen 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 Suominen Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suominen Oyj has no effect on the direction of EQ Oyj i.e., EQ Oyj and Suominen Oyj go up and down completely randomly.
Pair Corralation between EQ Oyj and Suominen Oyj
Assuming the 90 days trading horizon eQ Oyj is expected to under-perform the Suominen Oyj. But the stock apears to be less risky and, when comparing its historical volatility, eQ Oyj is 1.44 times less risky than Suominen Oyj. The stock trades about -0.07 of its potential returns per unit of risk. The Suominen Oyj is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 285.00 in Suominen Oyj on September 12, 2024 and sell it today you would lose (78.00) from holding Suominen Oyj or give up 27.37% 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. Suominen Oyj
Performance |
| Timeline |
| eQ Oyj |
| Suominen Oyj |
EQ Oyj and Suominen Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EQ Oyj and Suominen Oyj
The main advantage of trading using opposite EQ Oyj and Suominen Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EQ Oyj position performs unexpectedly, Suominen 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 Suominen Oyj will offset losses from the drop in Suominen Oyj's long position.The idea behind eQ Oyj and Suominen 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.| Suominen Oyj vs. Tokmanni Group Oyj | Suominen Oyj vs. Kemira Oyj | Suominen Oyj vs. Telia Company AB | Suominen Oyj vs. Outokumpu 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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