Correlation Between Telia Company and Wartsila Oyj
Can any of the company-specific risk be diversified away by investing in both Telia Company and Wartsila 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 Telia Company and Wartsila Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telia Company AB and Wartsila Oyj Abp, you can compare the effects of market volatilities on Telia Company and Wartsila 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 Telia Company with a short position of Wartsila Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telia Company and Wartsila Oyj.
Diversification Opportunities for Telia Company and Wartsila Oyj
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Telia and Wartsila is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Telia Company AB and Wartsila Oyj Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wartsila Oyj Abp and Telia Company 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 Telia Company AB are associated (or correlated) with Wartsila Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wartsila Oyj Abp has no effect on the direction of Telia Company i.e., Telia Company and Wartsila Oyj go up and down completely randomly.
Pair Corralation between Telia Company and Wartsila Oyj
Assuming the 90 days trading horizon Telia Company AB is expected to generate 0.42 times more return on investment than Wartsila Oyj. However, Telia Company AB is 2.39 times less risky than Wartsila Oyj. It trades about -0.03 of its potential returns per unit of risk. Wartsila Oyj Abp is currently generating about -0.22 per unit of risk. If you would invest 277.00 in Telia Company AB on August 29, 2024 and sell it today you would lose (3.00) from holding Telia Company AB or give up 1.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telia Company AB vs. Wartsila Oyj Abp
Performance |
| Timeline |
| Telia Company |
| Wartsila Oyj Abp |
Telia Company and Wartsila Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telia Company and Wartsila Oyj
The main advantage of trading using opposite Telia Company and Wartsila Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telia Company position performs unexpectedly, Wartsila 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 Wartsila Oyj will offset losses from the drop in Wartsila Oyj's long position.| Telia Company vs. Nordea Bank Abp | Telia Company vs. Sampo Oyj A | Telia Company vs. Fortum Oyj | Telia Company vs. Wartsila Oyj Abp |
| Wartsila Oyj vs. Aktia Bank Abp | Wartsila Oyj vs. Alandsbanken Abp B | Wartsila Oyj vs. Alandsbanken Abp A | Wartsila Oyj 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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