Correlation Between Inderes Oyj and Kempower Oyj

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Can any of the company-specific risk be diversified away by investing in both Inderes Oyj and Kempower 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 Inderes Oyj and Kempower Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inderes Oyj and Kempower Oyj, you can compare the effects of market volatilities on Inderes Oyj and Kempower 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 Inderes Oyj with a short position of Kempower Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inderes Oyj and Kempower Oyj.

Diversification Opportunities for Inderes Oyj and Kempower Oyj

-0.63
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Inderes and Kempower is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Inderes Oyj and Kempower Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kempower Oyj and Inderes 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 Inderes Oyj are associated (or correlated) with Kempower Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kempower Oyj has no effect on the direction of Inderes Oyj i.e., Inderes Oyj and Kempower Oyj go up and down completely randomly.

Pair Corralation between Inderes Oyj and Kempower Oyj

Assuming the 90 days trading horizon Inderes Oyj is expected to generate 0.5 times more return on investment than Kempower Oyj. However, Inderes Oyj is 2.01 times less risky than Kempower Oyj. It trades about 0.12 of its potential returns per unit of risk. Kempower Oyj is currently generating about -0.14 per unit of risk. If you would invest  1,847  in Inderes Oyj on September 3, 2024 and sell it today you would earn a total of  118.00  from holding Inderes Oyj or generate 6.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Inderes Oyj  vs.  Kempower Oyj

 Performance 
       Timeline  
Inderes Oyj 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Inderes Oyj are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Inderes Oyj is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
Kempower Oyj 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Kempower Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Inderes Oyj and Kempower Oyj Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Inderes Oyj and Kempower Oyj

The main advantage of trading using opposite Inderes Oyj and Kempower Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inderes Oyj position performs unexpectedly, Kempower 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 Kempower Oyj will offset losses from the drop in Kempower Oyj's long position.
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The idea behind Inderes Oyj and Kempower Oyj 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.
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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