Correlation Between Kemira Oyj and Wartsila Oyj
Can any of the company-specific risk be diversified away by investing in both Kemira Oyj and Wartsila 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 Wartsila 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 Wartsila Oyj Abp, you can compare the effects of market volatilities on Kemira Oyj and Wartsila 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 Wartsila Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kemira Oyj and Wartsila Oyj.
Diversification Opportunities for Kemira Oyj and Wartsila Oyj
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kemira and Wartsila is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Kemira Oyj and Wartsila Oyj Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wartsila Oyj Abp 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 Wartsila Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wartsila Oyj Abp has no effect on the direction of Kemira Oyj i.e., Kemira Oyj and Wartsila Oyj go up and down completely randomly.
Pair Corralation between Kemira Oyj and Wartsila Oyj
Assuming the 90 days trading horizon Kemira Oyj is expected to under-perform the Wartsila Oyj. But the stock apears to be less risky and, when comparing its historical volatility, Kemira Oyj is 1.98 times less risky than Wartsila Oyj. The stock trades about -0.25 of its potential returns per unit of risk. The Wartsila Oyj Abp is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 2,050 in Wartsila Oyj Abp on August 27, 2024 and sell it today you would lose (274.00) from holding Wartsila Oyj Abp or give up 13.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kemira Oyj vs. Wartsila Oyj Abp
Performance |
| Timeline |
| Kemira Oyj |
| Wartsila Oyj Abp |
Kemira Oyj and Wartsila Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kemira Oyj and Wartsila Oyj
The main advantage of trading using opposite Kemira Oyj and Wartsila Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kemira Oyj position performs unexpectedly, Wartsila 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 Wartsila Oyj will offset losses from the drop in Wartsila Oyj's long position.| Kemira Oyj vs. UPM Kymmene Oyj | Kemira Oyj vs. Wartsila Oyj Abp | Kemira Oyj vs. Sampo Oyj A | Kemira Oyj vs. Valmet Oyj |
| Wartsila Oyj vs. Aktia Bank Abp | Wartsila Oyj vs. Alandsbanken Abp B | Wartsila Oyj vs. Alandsbanken Abp A | Wartsila Oyj vs. Sampo Oyj A |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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