Correlation Between Raute Oyj and Elecster Oyj
Can any of the company-specific risk be diversified away by investing in both Raute Oyj and Elecster 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 Raute Oyj and Elecster Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raute Oyj and Elecster Oyj A, you can compare the effects of market volatilities on Raute Oyj and Elecster 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 Raute Oyj with a short position of Elecster Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raute Oyj and Elecster Oyj.
Diversification Opportunities for Raute Oyj and Elecster Oyj
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Raute and Elecster is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Raute Oyj and Elecster Oyj A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elecster Oyj A and Raute 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 Raute Oyj are associated (or correlated) with Elecster Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elecster Oyj A has no effect on the direction of Raute Oyj i.e., Raute Oyj and Elecster Oyj go up and down completely randomly.
Pair Corralation between Raute Oyj and Elecster Oyj
Assuming the 90 days trading horizon Raute Oyj is expected to generate 0.62 times more return on investment than Elecster Oyj. However, Raute Oyj is 1.61 times less risky than Elecster Oyj. It trades about 0.04 of its potential returns per unit of risk. Elecster Oyj A is currently generating about -0.03 per unit of risk. If you would invest 1,045 in Raute Oyj on September 2, 2024 and sell it today you would earn a total of 260.00 from holding Raute Oyj or generate 24.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Raute Oyj vs. Elecster Oyj A
Performance |
| Timeline |
| Raute Oyj |
| Elecster Oyj A |
Raute Oyj and Elecster Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raute Oyj and Elecster Oyj
The main advantage of trading using opposite Raute Oyj and Elecster Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raute Oyj position performs unexpectedly, Elecster 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 Elecster Oyj will offset losses from the drop in Elecster Oyj's long position.The idea behind Raute Oyj and Elecster Oyj A pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Elecster Oyj vs. Admicom Oyj | Elecster Oyj vs. Vincit Group Oyj | Elecster Oyj vs. Harvia Oyj | Elecster Oyj vs. Remedy Entertainment 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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