Correlation Between Metsa Board and Viking Line
Can any of the company-specific risk be diversified away by investing in both Metsa Board and Viking Line 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 Metsa Board and Viking Line into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metsa Board Oyj and Viking Line Abp, you can compare the effects of market volatilities on Metsa Board and Viking Line 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 Metsa Board with a short position of Viking Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metsa Board and Viking Line.
Diversification Opportunities for Metsa Board and Viking Line
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Metsa and Viking is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Metsa Board Oyj and Viking Line Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viking Line Abp and Metsa Board 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 Metsa Board Oyj are associated (or correlated) with Viking Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viking Line Abp has no effect on the direction of Metsa Board i.e., Metsa Board and Viking Line go up and down completely randomly.
Pair Corralation between Metsa Board and Viking Line
Assuming the 90 days trading horizon Metsa Board Oyj is expected to under-perform the Viking Line. In addition to that, Metsa Board is 1.05 times more volatile than Viking Line Abp. It trades about -0.05 of its total potential returns per unit of risk. Viking Line Abp is currently generating about 0.06 per unit of volatility. If you would invest 1,458 in Viking Line Abp on August 24, 2024 and sell it today you would earn a total of 602.00 from holding Viking Line Abp or generate 41.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metsa Board Oyj vs. Viking Line Abp
Performance |
| Timeline |
| Metsa Board Oyj |
| Viking Line Abp |
Metsa Board and Viking Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metsa Board and Viking Line
The main advantage of trading using opposite Metsa Board and Viking Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metsa Board position performs unexpectedly, Viking Line 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 Viking Line will offset losses from the drop in Viking Line's long position.| Metsa Board vs. UPM Kymmene Oyj | Metsa Board vs. Stora Enso Oyj | Metsa Board vs. Valmet Oyj | Metsa Board vs. Wartsila Oyj Abp |
| Viking Line vs. SSH Communications Security | Viking Line vs. Tamtron Group Oyj | Viking Line vs. Metsa Board Oyj | Viking Line vs. Qt 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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