Correlation Between Fortum Oyj and Harvia Oyj
Can any of the company-specific risk be diversified away by investing in both Fortum Oyj and Harvia 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 Fortum Oyj and Harvia Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortum Oyj and Harvia Oyj, you can compare the effects of market volatilities on Fortum Oyj and Harvia 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 Fortum Oyj with a short position of Harvia Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortum Oyj and Harvia Oyj.
Diversification Opportunities for Fortum Oyj and Harvia Oyj
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fortum and Harvia is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Fortum Oyj and Harvia Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvia Oyj 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 Harvia Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvia Oyj has no effect on the direction of Fortum Oyj i.e., Fortum Oyj and Harvia Oyj go up and down completely randomly.
Pair Corralation between Fortum Oyj and Harvia Oyj
Assuming the 90 days trading horizon Fortum Oyj is expected to generate 1.24 times more return on investment than Harvia Oyj. However, Fortum Oyj is 1.24 times more volatile than Harvia Oyj. It trades about 0.08 of its potential returns per unit of risk. Harvia Oyj is currently generating about -0.16 per unit of risk. If you would invest 1,403 in Fortum Oyj on August 24, 2024 and sell it today you would earn a total of 47.00 from holding Fortum Oyj or generate 3.35% 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. Harvia Oyj
Performance |
| Timeline |
| Fortum Oyj |
| Harvia Oyj |
Fortum Oyj and Harvia Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortum Oyj and Harvia Oyj
The main advantage of trading using opposite Fortum Oyj and Harvia Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortum Oyj position performs unexpectedly, Harvia 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 Harvia Oyj will offset losses from the drop in Harvia Oyj's long position.| Fortum Oyj vs. Terveystalo Oy | Fortum Oyj vs. Investors House | Fortum Oyj vs. Fiskars Oyj Abp | Fortum Oyj vs. Tokmanni Group Oyj |
| Harvia Oyj vs. Qt Group Oyj | Harvia Oyj vs. Kamux Suomi Oy | Harvia Oyj vs. Sampo Oyj A | Harvia Oyj vs. Tokmanni Group 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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