Correlation Between Persimmon Plc and Stora Enso
Can any of the company-specific risk be diversified away by investing in both Persimmon Plc and Stora Enso 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 Persimmon Plc and Stora Enso into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Persimmon Plc and Stora Enso Oyj, you can compare the effects of market volatilities on Persimmon Plc and Stora Enso 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 Persimmon Plc with a short position of Stora Enso. Check out your portfolio center. Please also check ongoing floating volatility patterns of Persimmon Plc and Stora Enso.
Diversification Opportunities for Persimmon Plc and Stora Enso
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Persimmon and Stora is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Persimmon Plc and Stora Enso Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stora Enso Oyj and Persimmon Plc 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 Persimmon Plc are associated (or correlated) with Stora Enso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stora Enso Oyj has no effect on the direction of Persimmon Plc i.e., Persimmon Plc and Stora Enso go up and down completely randomly.
Pair Corralation between Persimmon Plc and Stora Enso
Assuming the 90 days horizon Persimmon Plc is expected to generate 1.16 times more return on investment than Stora Enso. However, Persimmon Plc is 1.16 times more volatile than Stora Enso Oyj. It trades about 0.02 of its potential returns per unit of risk. Stora Enso Oyj is currently generating about -0.07 per unit of risk. If you would invest 2,796 in Persimmon Plc on August 29, 2024 and sell it today you would earn a total of 426.00 from holding Persimmon Plc or generate 15.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 31.31% |
| Values | Daily Returns |
Persimmon Plc vs. Stora Enso Oyj
Performance |
| Timeline |
| Persimmon Plc |
| Stora Enso Oyj |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Persimmon Plc and Stora Enso Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Persimmon Plc and Stora Enso
The main advantage of trading using opposite Persimmon Plc and Stora Enso positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Persimmon Plc position performs unexpectedly, Stora Enso 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 Stora Enso will offset losses from the drop in Stora Enso's long position.| Persimmon Plc vs. Taylor Wimpey plc | Persimmon Plc vs. Barratt Developments PLC | Persimmon Plc vs. Barratt Developments plc | Persimmon Plc vs. Consorcio ARA S |
| Stora Enso vs. Nine Dragons Paper | Stora Enso vs. Canfor Pulp Products | Stora Enso vs. Mondi PLC ADR | Stora Enso vs. Clearwater Paper |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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