Correlation Between EQ Oyj and Viafin Service
Can any of the company-specific risk be diversified away by investing in both EQ Oyj and Viafin Service 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 Viafin Service into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between eQ Oyj and Viafin Service Oyj, you can compare the effects of market volatilities on EQ Oyj and Viafin Service 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 Viafin Service. Check out your portfolio center. Please also check ongoing floating volatility patterns of EQ Oyj and Viafin Service.
Diversification Opportunities for EQ Oyj and Viafin Service
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between EQV1V and Viafin is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding eQ Oyj and Viafin Service Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viafin Service 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 Viafin Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viafin Service Oyj has no effect on the direction of EQ Oyj i.e., EQ Oyj and Viafin Service go up and down completely randomly.
Pair Corralation between EQ Oyj and Viafin Service
Assuming the 90 days trading horizon eQ Oyj is expected to under-perform the Viafin Service. But the stock apears to be less risky and, when comparing its historical volatility, eQ Oyj is 1.22 times less risky than Viafin Service. The stock trades about -0.14 of its potential returns per unit of risk. The Viafin Service Oyj is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,820 in Viafin Service Oyj on August 30, 2024 and sell it today you would earn a total of 120.00 from holding Viafin Service Oyj or generate 6.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
eQ Oyj vs. Viafin Service Oyj
Performance |
| Timeline |
| eQ Oyj |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Viafin Service Oyj |
EQ Oyj and Viafin Service Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EQ Oyj and Viafin Service
The main advantage of trading using opposite EQ Oyj and Viafin Service positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EQ Oyj position performs unexpectedly, Viafin Service 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 Viafin Service will offset losses from the drop in Viafin Service's long position.The idea behind eQ Oyj and Viafin Service 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.| Viafin Service vs. SSH Communications Security | Viafin Service vs. Sotkamo Silver AB | Viafin Service vs. Reka Industrial Oyj | Viafin Service vs. United Bankers 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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