Correlation Between Suominen Oyj and Kemira Oyj
Can any of the company-specific risk be diversified away by investing in both Suominen Oyj and Kemira 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 Suominen Oyj and Kemira Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suominen Oyj and Kemira Oyj, you can compare the effects of market volatilities on Suominen Oyj and Kemira 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 Suominen Oyj with a short position of Kemira Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suominen Oyj and Kemira Oyj.
Diversification Opportunities for Suominen Oyj and Kemira Oyj
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Suominen and Kemira is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Suominen Oyj and Kemira Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kemira Oyj and Suominen 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 Suominen Oyj are associated (or correlated) with Kemira Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kemira Oyj has no effect on the direction of Suominen Oyj i.e., Suominen Oyj and Kemira Oyj go up and down completely randomly.
Pair Corralation between Suominen Oyj and Kemira Oyj
Assuming the 90 days trading horizon Suominen Oyj is expected to under-perform the Kemira Oyj. In addition to that, Suominen Oyj is 2.1 times more volatile than Kemira Oyj. It trades about -0.2 of its total potential returns per unit of risk. Kemira Oyj is currently generating about 0.0 per unit of volatility. If you would invest 1,955 in Kemira Oyj on September 12, 2024 and sell it today you would lose (6.00) from holding Kemira Oyj or give up 0.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Suominen Oyj vs. Kemira Oyj
Performance |
| Timeline |
| Suominen Oyj |
| Kemira Oyj |
Suominen Oyj and Kemira Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suominen Oyj and Kemira Oyj
The main advantage of trading using opposite Suominen Oyj and Kemira Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suominen Oyj position performs unexpectedly, Kemira 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 Kemira Oyj will offset losses from the drop in Kemira Oyj's long position.| Suominen Oyj vs. Tokmanni Group Oyj | Suominen Oyj vs. Kemira Oyj | Suominen Oyj vs. Telia Company AB | Suominen Oyj vs. Outokumpu Oyj |
| Kemira Oyj vs. UPM Kymmene Oyj | Kemira Oyj vs. Stora Enso Oyj | Kemira Oyj vs. Valmet Oyj | Kemira Oyj vs. Wartsila Oyj Abp |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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