Correlation Between Lassila Tikanoja and Kemira Oyj
Can any of the company-specific risk be diversified away by investing in both Lassila Tikanoja and Kemira 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 Lassila Tikanoja and Kemira Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lassila Tikanoja Oyj and Kemira Oyj, you can compare the effects of market volatilities on Lassila Tikanoja and Kemira 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 Lassila Tikanoja with a short position of Kemira Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lassila Tikanoja and Kemira Oyj.
Diversification Opportunities for Lassila Tikanoja and Kemira Oyj
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lassila and Kemira is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Lassila Tikanoja Oyj and Kemira Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kemira Oyj and Lassila Tikanoja 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 Lassila Tikanoja Oyj are associated (or correlated) with Kemira Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kemira Oyj has no effect on the direction of Lassila Tikanoja i.e., Lassila Tikanoja and Kemira Oyj go up and down completely randomly.
Pair Corralation between Lassila Tikanoja and Kemira Oyj
Assuming the 90 days trading horizon Lassila Tikanoja Oyj is expected to under-perform the Kemira Oyj. But the stock apears to be less risky and, when comparing its historical volatility, Lassila Tikanoja Oyj is 1.59 times less risky than Kemira Oyj. The stock trades about -0.02 of its potential returns per unit of risk. The Kemira Oyj is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,314 in Kemira Oyj on September 12, 2024 and sell it today you would earn a total of 635.00 from holding Kemira Oyj or generate 48.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lassila Tikanoja Oyj vs. Kemira Oyj
Performance |
| Timeline |
| Lassila Tikanoja Oyj |
| Kemira Oyj |
Lassila Tikanoja and Kemira Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lassila Tikanoja and Kemira Oyj
The main advantage of trading using opposite Lassila Tikanoja and Kemira Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lassila Tikanoja position performs unexpectedly, Kemira 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 Kemira Oyj will offset losses from the drop in Kemira Oyj's long position.| Lassila Tikanoja vs. Telefonaktiebolaget LM Ericsson | Lassila Tikanoja vs. KONE Oyj | Lassila Tikanoja vs. Nordea Bank Abp | Lassila Tikanoja vs. TietoEVRY Corp |
| Kemira Oyj vs. UPM Kymmene Oyj | Kemira Oyj vs. Stora Enso Oyj | Kemira Oyj vs. Valmet Oyj | Kemira Oyj vs. Wartsila Oyj 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |