Correlation Between Sotkamo Silver and Fortum Oyj
Can any of the company-specific risk be diversified away by investing in both Sotkamo Silver and Fortum 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 Sotkamo Silver and Fortum Oyj 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 Fortum Oyj, you can compare the effects of market volatilities on Sotkamo Silver and Fortum 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 Sotkamo Silver with a short position of Fortum Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sotkamo Silver and Fortum Oyj.
Diversification Opportunities for Sotkamo Silver and Fortum Oyj
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sotkamo and Fortum is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Sotkamo Silver AB and Fortum Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortum Oyj 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 Fortum Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortum Oyj has no effect on the direction of Sotkamo Silver i.e., Sotkamo Silver and Fortum Oyj go up and down completely randomly.
Pair Corralation between Sotkamo Silver and Fortum Oyj
Assuming the 90 days trading horizon Sotkamo Silver AB is expected to under-perform the Fortum Oyj. In addition to that, Sotkamo Silver is 2.53 times more volatile than Fortum Oyj. It trades about -0.12 of its total potential returns per unit of risk. Fortum Oyj is currently generating about 0.05 per unit of volatility. If you would invest 1,423 in Fortum Oyj on August 28, 2024 and sell it today you would earn a total of 25.00 from holding Fortum Oyj or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sotkamo Silver AB vs. Fortum Oyj
Performance |
| Timeline |
| Sotkamo Silver AB |
| Fortum Oyj |
Sotkamo Silver and Fortum Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sotkamo Silver and Fortum Oyj
The main advantage of trading using opposite Sotkamo Silver and Fortum Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sotkamo Silver position performs unexpectedly, Fortum 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 Fortum Oyj will offset losses from the drop in Fortum Oyj's long position.| Sotkamo Silver vs. Outokumpu Oyj | Sotkamo Silver vs. SSAB AB ser | Sotkamo Silver vs. Telia Company AB | Sotkamo Silver vs. Wartsila Oyj Abp |
| Fortum Oyj vs. HKFoods Oyj A | Fortum Oyj vs. QPR Software Oyj | Fortum Oyj vs. Nordea Bank Abp | Fortum Oyj vs. Sotkamo Silver AB |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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