Correlation Between Kesko Oyj and Wartsila Oyj
Can any of the company-specific risk be diversified away by investing in both Kesko 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 Kesko 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 Kesko Oyj and Wartsila Oyj Abp, you can compare the effects of market volatilities on Kesko 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 Kesko Oyj with a short position of Wartsila Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kesko Oyj and Wartsila Oyj.
Diversification Opportunities for Kesko Oyj and Wartsila Oyj
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kesko and Wartsila is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Kesko 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 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 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 Kesko Oyj i.e., Kesko Oyj and Wartsila Oyj go up and down completely randomly.
Pair Corralation between Kesko Oyj and Wartsila Oyj
Assuming the 90 days trading horizon Kesko Oyj is expected to generate 2.07 times less return on investment than Wartsila Oyj. But when comparing it to its historical volatility, Kesko Oyj is 1.37 times less risky than Wartsila Oyj. It trades about 0.11 of its potential returns per unit of risk. Wartsila Oyj Abp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,741 in Wartsila Oyj Abp on November 3, 2024 and sell it today you would earn a total of 85.00 from holding Wartsila Oyj Abp or generate 4.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kesko Oyj vs. Wartsila Oyj Abp
Performance |
| Timeline |
| Kesko Oyj |
| Wartsila Oyj Abp |
Kesko Oyj and Wartsila Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kesko Oyj and Wartsila Oyj
The main advantage of trading using opposite Kesko Oyj and Wartsila Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kesko 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.| Kesko Oyj vs. Sampo Oyj A | Kesko Oyj vs. UPM Kymmene Oyj | Kesko Oyj vs. Valmet Oyj | Kesko Oyj vs. Elisa Oyj |
| Wartsila Oyj vs. Sampo Oyj A | Wartsila Oyj vs. Fortum Oyj | Wartsila Oyj vs. UPM Kymmene Oyj | Wartsila Oyj vs. Nordea Bank Abp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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