Correlation Between Sotkamo Silver and Detection Technology
Can any of the company-specific risk be diversified away by investing in both Sotkamo Silver and Detection Technology 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 Sotkamo Silver and Detection Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sotkamo Silver AB and Detection Technology OY, you can compare the effects of market volatilities on Sotkamo Silver and Detection Technology 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 Sotkamo Silver with a short position of Detection Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sotkamo Silver and Detection Technology.
Diversification Opportunities for Sotkamo Silver and Detection Technology
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sotkamo and Detection is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sotkamo Silver AB and Detection Technology OY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Detection Technology and Sotkamo Silver 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 Sotkamo Silver AB are associated (or correlated) with Detection Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Detection Technology has no effect on the direction of Sotkamo Silver i.e., Sotkamo Silver and Detection Technology go up and down completely randomly.
Pair Corralation between Sotkamo Silver and Detection Technology
Assuming the 90 days trading horizon Sotkamo Silver AB is expected to generate 2.34 times more return on investment than Detection Technology. However, Sotkamo Silver is 2.34 times more volatile than Detection Technology OY. It trades about 0.06 of its potential returns per unit of risk. Detection Technology OY is currently generating about -0.01 per unit of risk. If you would invest 4.11 in Sotkamo Silver AB on August 29, 2024 and sell it today you would earn a total of 5.19 from holding Sotkamo Silver AB or generate 126.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sotkamo Silver AB vs. Detection Technology OY
Performance |
| Timeline |
| Sotkamo Silver AB |
| Detection Technology |
Sotkamo Silver and Detection Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sotkamo Silver and Detection Technology
The main advantage of trading using opposite Sotkamo Silver and Detection Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sotkamo Silver position performs unexpectedly, Detection Technology 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 Detection Technology will offset losses from the drop in Detection Technology's long position.| Sotkamo Silver vs. Outokumpu Oyj | Sotkamo Silver vs. Finnair Oyj | Sotkamo Silver vs. SSAB AB ser | Sotkamo Silver vs. Telia Company AB |
| Detection Technology vs. Revenio Group | Detection Technology vs. Remedy Entertainment Oyj | Detection Technology vs. Bittium Oyj | Detection Technology vs. Gofore 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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