Correlation Between Fortum Oyj and Azelio AB
Can any of the company-specific risk be diversified away by investing in both Fortum Oyj and Azelio AB 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 Fortum Oyj and Azelio AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortum Oyj and Azelio AB, you can compare the effects of market volatilities on Fortum Oyj and Azelio AB 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 Fortum Oyj with a short position of Azelio AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortum Oyj and Azelio AB.
Diversification Opportunities for Fortum Oyj and Azelio AB
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fortum and Azelio is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Fortum Oyj and Azelio AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azelio AB and Fortum 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 Fortum Oyj are associated (or correlated) with Azelio AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azelio AB has no effect on the direction of Fortum Oyj i.e., Fortum Oyj and Azelio AB go up and down completely randomly.
Pair Corralation between Fortum Oyj and Azelio AB
Assuming the 90 days horizon Fortum Oyj is expected to generate 13.37 times less return on investment than Azelio AB. But when comparing it to its historical volatility, Fortum Oyj is 7.42 times less risky than Azelio AB. It trades about 0.03 of its potential returns per unit of risk. Azelio AB is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 100.00 in Azelio AB on August 28, 2024 and sell it today you would lose (97.00) from holding Azelio AB or give up 97.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 44.23% |
| Values | Daily Returns |
Fortum Oyj vs. Azelio AB
Performance |
| Timeline |
| Fortum Oyj |
| Azelio AB |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Fortum Oyj and Azelio AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortum Oyj and Azelio AB
The main advantage of trading using opposite Fortum Oyj and Azelio AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortum Oyj position performs unexpectedly, Azelio AB 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 Azelio AB will offset losses from the drop in Azelio AB's long position.The idea behind Fortum Oyj and Azelio AB 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.| Azelio AB vs. Astra Energy | Azelio AB vs. Alternus Energy Group | Azelio AB vs. American Security Resources | Azelio AB vs. Carnegie Clean Energy |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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