Correlation Between Fortum Oyj and Aktia Bank
Can any of the company-specific risk be diversified away by investing in both Fortum Oyj and Aktia Bank 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 Aktia Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortum Oyj and Aktia Bank Abp, you can compare the effects of market volatilities on Fortum Oyj and Aktia Bank 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 Aktia Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortum Oyj and Aktia Bank.
Diversification Opportunities for Fortum Oyj and Aktia Bank
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fortum and Aktia is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Fortum Oyj and Aktia Bank Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aktia Bank Abp 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 Aktia Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aktia Bank Abp has no effect on the direction of Fortum Oyj i.e., Fortum Oyj and Aktia Bank go up and down completely randomly.
Pair Corralation between Fortum Oyj and Aktia Bank
Assuming the 90 days trading horizon Fortum Oyj is expected to generate 4.31 times more return on investment than Aktia Bank. However, Fortum Oyj is 4.31 times more volatile than Aktia Bank Abp. It trades about 0.14 of its potential returns per unit of risk. Aktia Bank Abp is currently generating about -0.1 per unit of risk. If you would invest 1,366 in Fortum Oyj on September 4, 2024 and sell it today you would earn a total of 77.00 from holding Fortum Oyj or generate 5.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortum Oyj vs. Aktia Bank Abp
Performance |
| Timeline |
| Fortum Oyj |
| Aktia Bank Abp |
Fortum Oyj and Aktia Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortum Oyj and Aktia Bank
The main advantage of trading using opposite Fortum Oyj and Aktia Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortum Oyj position performs unexpectedly, Aktia Bank 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 Aktia Bank will offset losses from the drop in Aktia Bank's long position.The idea behind Fortum Oyj and Aktia Bank Abp 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.| Aktia Bank vs. Sampo Oyj A | Aktia Bank vs. Tokmanni Group Oyj | Aktia Bank vs. Nordea Bank Abp | Aktia Bank vs. TietoEVRY Corp |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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