Correlation Between Incap Oyj and Innofactor Oyj
Can any of the company-specific risk be diversified away by investing in both Incap Oyj and Innofactor 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 Incap Oyj and Innofactor Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Incap Oyj and Innofactor Oyj, you can compare the effects of market volatilities on Incap Oyj and Innofactor 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 Incap Oyj with a short position of Innofactor Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Incap Oyj and Innofactor Oyj.
Diversification Opportunities for Incap Oyj and Innofactor Oyj
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Incap and Innofactor is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Incap Oyj and Innofactor Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innofactor Oyj and Incap 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 Incap Oyj are associated (or correlated) with Innofactor Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innofactor Oyj has no effect on the direction of Incap Oyj i.e., Incap Oyj and Innofactor Oyj go up and down completely randomly.
Pair Corralation between Incap Oyj and Innofactor Oyj
Assuming the 90 days trading horizon Incap Oyj is expected to under-perform the Innofactor Oyj. In addition to that, Incap Oyj is 1.58 times more volatile than Innofactor Oyj. It trades about -0.13 of its total potential returns per unit of risk. Innofactor Oyj is currently generating about 0.02 per unit of volatility. If you would invest 168.00 in Innofactor Oyj on August 30, 2024 and sell it today you would earn a total of 1.00 from holding Innofactor Oyj or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Incap Oyj vs. Innofactor Oyj
Performance |
| Timeline |
| Incap Oyj |
| Innofactor Oyj |
Incap Oyj and Innofactor Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Incap Oyj and Innofactor Oyj
The main advantage of trading using opposite Incap Oyj and Innofactor Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Incap Oyj position performs unexpectedly, Innofactor 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 Innofactor Oyj will offset losses from the drop in Innofactor Oyj's long position.| Incap Oyj vs. Harvia Oyj | Incap Oyj vs. Qt Group Oyj | Incap Oyj vs. Revenio Group | Incap Oyj vs. Tecnotree Oyj |
| Innofactor Oyj vs. Tecnotree Oyj | Innofactor Oyj vs. Qt Group Oyj | Innofactor Oyj vs. Harvia Oyj | Innofactor Oyj vs. Kamux Suomi Oy |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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