Correlation Between Stora Enso and Orion Oyj
Can any of the company-specific risk be diversified away by investing in both Stora Enso and Orion 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 Stora Enso and Orion Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stora Enso Oyj and Orion Oyj A, you can compare the effects of market volatilities on Stora Enso and Orion 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 Stora Enso with a short position of Orion Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stora Enso and Orion Oyj.
Diversification Opportunities for Stora Enso and Orion Oyj
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stora and Orion is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Stora Enso Oyj and Orion Oyj A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orion Oyj A and Stora Enso 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 Stora Enso Oyj are associated (or correlated) with Orion Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orion Oyj A has no effect on the direction of Stora Enso i.e., Stora Enso and Orion Oyj go up and down completely randomly.
Pair Corralation between Stora Enso and Orion Oyj
Assuming the 90 days trading horizon Stora Enso Oyj is expected to under-perform the Orion Oyj. In addition to that, Stora Enso is 1.3 times more volatile than Orion Oyj A. It trades about -0.3 of its total potential returns per unit of risk. Orion Oyj A is currently generating about 0.03 per unit of volatility. If you would invest 4,460 in Orion Oyj A on August 31, 2024 and sell it today you would earn a total of 25.00 from holding Orion Oyj A or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stora Enso Oyj vs. Orion Oyj A
Performance |
| Timeline |
| Stora Enso Oyj |
| Orion Oyj A |
Stora Enso and Orion Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stora Enso and Orion Oyj
The main advantage of trading using opposite Stora Enso and Orion Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stora Enso position performs unexpectedly, Orion 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 Orion Oyj will offset losses from the drop in Orion Oyj's long position.| Stora Enso vs. UPM Kymmene Oyj | Stora Enso vs. Wartsila Oyj Abp | Stora Enso vs. Fortum Oyj | Stora Enso vs. Sampo Oyj A |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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