Correlation Between Outokumpu Oyj and Cadence Design
Can any of the company-specific risk be diversified away by investing in both Outokumpu Oyj and Cadence Design 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 Cadence Design into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Outokumpu Oyj and Cadence Design Systems, you can compare the effects of market volatilities on Outokumpu Oyj and Cadence Design 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 Cadence Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outokumpu Oyj and Cadence Design.
Diversification Opportunities for Outokumpu Oyj and Cadence Design
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Outokumpu and Cadence is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Outokumpu Oyj and Cadence Design Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadence Design Systems 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 Cadence Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadence Design Systems has no effect on the direction of Outokumpu Oyj i.e., Outokumpu Oyj and Cadence Design go up and down completely randomly.
Pair Corralation between Outokumpu Oyj and Cadence Design
Assuming the 90 days horizon Outokumpu Oyj is expected to under-perform the Cadence Design. But the pink sheet apears to be less risky and, when comparing its historical volatility, Outokumpu Oyj is 1.9 times less risky than Cadence Design. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Cadence Design Systems is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 26,875 in Cadence Design Systems on September 4, 2024 and sell it today you would earn a total of 4,450 from holding Cadence Design Systems or generate 16.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 74.49% |
| Values | Daily Returns |
Outokumpu Oyj vs. Cadence Design Systems
Performance |
| Timeline |
| Outokumpu Oyj |
| Cadence Design Systems |
Outokumpu Oyj and Cadence Design Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Outokumpu Oyj and Cadence Design
The main advantage of trading using opposite Outokumpu Oyj and Cadence Design positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outokumpu Oyj position performs unexpectedly, Cadence Design 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 Cadence Design will offset losses from the drop in Cadence Design's long position.| Outokumpu Oyj vs. Oatly Group AB | Outokumpu Oyj vs. Diageo PLC ADR | Outokumpu Oyj vs. Viemed Healthcare | Outokumpu Oyj vs. SNDL Inc |
| Cadence Design vs. Workday | Cadence Design vs. Salesforce | Cadence Design vs. Intuit Inc | Cadence Design vs. Snowflake |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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