Correlation Between Ferrexpo PLC and Outokumpu Oyj
Can any of the company-specific risk be diversified away by investing in both Ferrexpo PLC and Outokumpu 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 Ferrexpo PLC and Outokumpu Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferrexpo PLC and Outokumpu Oyj ADR, you can compare the effects of market volatilities on Ferrexpo PLC and Outokumpu 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 Ferrexpo PLC with a short position of Outokumpu Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferrexpo PLC and Outokumpu Oyj.
Diversification Opportunities for Ferrexpo PLC and Outokumpu Oyj
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ferrexpo and Outokumpu is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ferrexpo PLC and Outokumpu Oyj ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outokumpu Oyj ADR and Ferrexpo PLC 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 Ferrexpo PLC are associated (or correlated) with Outokumpu Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outokumpu Oyj ADR has no effect on the direction of Ferrexpo PLC i.e., Ferrexpo PLC and Outokumpu Oyj go up and down completely randomly.
Pair Corralation between Ferrexpo PLC and Outokumpu Oyj
Assuming the 90 days horizon Ferrexpo PLC is expected to under-perform the Outokumpu Oyj. In addition to that, Ferrexpo PLC is 1.83 times more volatile than Outokumpu Oyj ADR. It trades about -0.04 of its total potential returns per unit of risk. Outokumpu Oyj ADR is currently generating about 0.03 per unit of volatility. If you would invest 150.00 in Outokumpu Oyj ADR on November 2, 2024 and sell it today you would earn a total of 1.00 from holding Outokumpu Oyj ADR or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Ferrexpo PLC vs. Outokumpu Oyj ADR
Performance |
| Timeline |
| Ferrexpo PLC |
| Outokumpu Oyj ADR |
Ferrexpo PLC and Outokumpu Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferrexpo PLC and Outokumpu Oyj
The main advantage of trading using opposite Ferrexpo PLC and Outokumpu Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferrexpo PLC position performs unexpectedly, Outokumpu 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 Outokumpu Oyj will offset losses from the drop in Outokumpu Oyj's long position.| Ferrexpo PLC vs. ArcelorMittal SA | Ferrexpo PLC vs. Acerinox SA ADR | Ferrexpo PLC vs. Aperam PK | Ferrexpo PLC vs. Algoma Steel Group |
| Outokumpu Oyj vs. Companhia Siderurgica Nacional | Outokumpu Oyj vs. Olympic Steel | Outokumpu Oyj vs. Usinas Siderurgicas de | Outokumpu Oyj vs. POSCO Holdings |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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