Correlation Between Fortum Oyj and Kemira Oyj
Can any of the company-specific risk be diversified away by investing in both Fortum Oyj and Kemira 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 Kemira 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 Kemira Oyj, you can compare the effects of market volatilities on Fortum Oyj and Kemira 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 Kemira Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortum Oyj and Kemira Oyj.
Diversification Opportunities for Fortum Oyj and Kemira Oyj
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fortum and Kemira is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Fortum Oyj and Kemira Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kemira 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 Kemira Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kemira Oyj has no effect on the direction of Fortum Oyj i.e., Fortum Oyj and Kemira Oyj go up and down completely randomly.
Pair Corralation between Fortum Oyj and Kemira Oyj
Assuming the 90 days trading horizon Fortum Oyj is expected to generate 1.12 times more return on investment than Kemira Oyj. However, Fortum Oyj is 1.12 times more volatile than Kemira Oyj. It trades about 0.03 of its potential returns per unit of risk. Kemira Oyj is currently generating about -0.17 per unit of risk. If you would invest 1,398 in Fortum Oyj on September 2, 2024 and sell it today you would earn a total of 29.00 from holding Fortum Oyj or generate 2.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortum Oyj vs. Kemira Oyj
Performance |
| Timeline |
| Fortum Oyj |
| Kemira Oyj |
Fortum Oyj and Kemira Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortum Oyj and Kemira Oyj
The main advantage of trading using opposite Fortum Oyj and Kemira Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortum Oyj position performs unexpectedly, Kemira 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 Kemira Oyj will offset losses from the drop in Kemira Oyj's long position.| Fortum Oyj vs. Rush Factory Oyj | Fortum Oyj vs. Purmo Group Oyj | Fortum Oyj vs. Boreo Oyj | Fortum Oyj vs. Metsa Board Oyj |
| Kemira Oyj vs. Sampo Oyj A | Kemira Oyj vs. Fortum Oyj | Kemira Oyj vs. Nordea Bank Abp | Kemira Oyj vs. Stora Enso 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 Stocks Directory module to find actively traded stocks across global markets.
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