Correlation Between Kemira Oyj and Suominen Oyj
Can any of the company-specific risk be diversified away by investing in both Kemira Oyj and Suominen 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 Kemira Oyj and Suominen Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kemira Oyj and Suominen Oyj, you can compare the effects of market volatilities on Kemira Oyj and Suominen 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 Kemira Oyj with a short position of Suominen Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kemira Oyj and Suominen Oyj.
Diversification Opportunities for Kemira Oyj and Suominen Oyj
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kemira and Suominen is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Kemira Oyj and Suominen Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suominen Oyj and Kemira 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 Kemira Oyj are associated (or correlated) with Suominen Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suominen Oyj has no effect on the direction of Kemira Oyj i.e., Kemira Oyj and Suominen Oyj go up and down completely randomly.
Pair Corralation between Kemira Oyj and Suominen Oyj
Assuming the 90 days trading horizon Kemira Oyj is expected to generate 0.82 times more return on investment than Suominen Oyj. However, Kemira Oyj is 1.21 times less risky than Suominen Oyj. It trades about 0.05 of its potential returns per unit of risk. Suominen Oyj is currently generating about -0.02 per unit of risk. If you would invest 1,357 in Kemira Oyj on September 12, 2024 and sell it today you would earn a total of 592.00 from holding Kemira Oyj or generate 43.63% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Kemira Oyj vs. Suominen Oyj
Performance |
Timeline |
Kemira Oyj |
Suominen Oyj |
Kemira Oyj and Suominen Oyj Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kemira Oyj and Suominen Oyj
The main advantage of trading using opposite Kemira Oyj and Suominen Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kemira Oyj position performs unexpectedly, Suominen 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 Suominen Oyj will offset losses from the drop in Suominen Oyj's long position.Kemira Oyj vs. UPM Kymmene Oyj | Kemira Oyj vs. Stora Enso Oyj | Kemira Oyj vs. Valmet Oyj | Kemira Oyj vs. Wartsila Oyj Abp |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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