Correlation Between Outokumpu Oyj and Bittium Oyj
Can any of the company-specific risk be diversified away by investing in both Outokumpu Oyj and Bittium 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 Outokumpu Oyj and Bittium Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Outokumpu Oyj and Bittium Oyj, you can compare the effects of market volatilities on Outokumpu Oyj and Bittium 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 Outokumpu Oyj with a short position of Bittium Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outokumpu Oyj and Bittium Oyj.
Diversification Opportunities for Outokumpu Oyj and Bittium Oyj
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Outokumpu and Bittium is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Outokumpu Oyj and Bittium Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bittium Oyj and Outokumpu 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 Outokumpu Oyj are associated (or correlated) with Bittium Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bittium Oyj has no effect on the direction of Outokumpu Oyj i.e., Outokumpu Oyj and Bittium Oyj go up and down completely randomly.
Pair Corralation between Outokumpu Oyj and Bittium Oyj
Assuming the 90 days trading horizon Outokumpu Oyj is expected to under-perform the Bittium Oyj. But the stock apears to be less risky and, when comparing its historical volatility, Outokumpu Oyj is 1.78 times less risky than Bittium Oyj. The stock trades about -0.08 of its potential returns per unit of risk. The Bittium Oyj is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 640.00 in Bittium Oyj on August 31, 2024 and sell it today you would earn a total of 30.00 from holding Bittium Oyj or generate 4.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Outokumpu Oyj vs. Bittium Oyj
Performance |
| Timeline |
| Outokumpu Oyj |
| Bittium Oyj |
Outokumpu Oyj and Bittium Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Outokumpu Oyj and Bittium Oyj
The main advantage of trading using opposite Outokumpu Oyj and Bittium Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outokumpu Oyj position performs unexpectedly, Bittium 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 Bittium Oyj will offset losses from the drop in Bittium Oyj's long position.| Outokumpu Oyj vs. Sampo Oyj A | Outokumpu Oyj vs. Fortum Oyj | Outokumpu Oyj vs. Nordea Bank Abp | Outokumpu Oyj vs. Stora Enso Oyj |
| Bittium Oyj vs. Revenio Group | Bittium Oyj vs. Outokumpu Oyj | Bittium Oyj vs. Qt Group Oyj | Bittium Oyj vs. CapMan Oyj B |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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