Correlation Between Kesko Oyj and Aallon Group
Can any of the company-specific risk be diversified away by investing in both Kesko Oyj and Aallon Group 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 Kesko Oyj and Aallon Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kesko Oyj and Aallon Group Oyj, you can compare the effects of market volatilities on Kesko Oyj and Aallon Group 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 Kesko Oyj with a short position of Aallon Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kesko Oyj and Aallon Group.
Diversification Opportunities for Kesko Oyj and Aallon Group
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kesko and Aallon is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Kesko Oyj and Aallon Group Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aallon Group Oyj and Kesko 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 Kesko Oyj are associated (or correlated) with Aallon Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aallon Group Oyj has no effect on the direction of Kesko Oyj i.e., Kesko Oyj and Aallon Group go up and down completely randomly.
Pair Corralation between Kesko Oyj and Aallon Group
Assuming the 90 days trading horizon Kesko Oyj is expected to generate 1.06 times more return on investment than Aallon Group. However, Kesko Oyj is 1.06 times more volatile than Aallon Group Oyj. It trades about 0.01 of its potential returns per unit of risk. Aallon Group Oyj is currently generating about -0.02 per unit of risk. If you would invest 1,867 in Kesko Oyj on August 30, 2024 and sell it today you would earn a total of 33.00 from holding Kesko Oyj or generate 1.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kesko Oyj vs. Aallon Group Oyj
Performance |
| Timeline |
| Kesko Oyj |
| Aallon Group Oyj |
Kesko Oyj and Aallon Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kesko Oyj and Aallon Group
The main advantage of trading using opposite Kesko Oyj and Aallon Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kesko Oyj position performs unexpectedly, Aallon Group 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 Aallon Group will offset losses from the drop in Aallon Group's long position.| Kesko Oyj vs. Sampo Oyj A | Kesko Oyj vs. UPM Kymmene Oyj | Kesko Oyj vs. Valmet Oyj | Kesko Oyj vs. Elisa Oyj |
| Aallon Group vs. Fondia Oyj | Aallon Group vs. Talenom Oyj | Aallon Group vs. Admicom Oyj | Aallon Group vs. Vincit Group 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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