Correlation Between THK Co and Wartsila Oyj
Can any of the company-specific risk be diversified away by investing in both THK Co 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 THK Co and Wartsila Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THK Co Ltd and Wartsila Oyj Abp, you can compare the effects of market volatilities on THK Co 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 THK Co with a short position of Wartsila Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of THK Co and Wartsila Oyj.
Diversification Opportunities for THK Co and Wartsila Oyj
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between THK and Wartsila is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding THK Co Ltd 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 THK Co 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 THK Co Ltd 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 THK Co i.e., THK Co and Wartsila Oyj go up and down completely randomly.
Pair Corralation between THK Co and Wartsila Oyj
Assuming the 90 days horizon THK Co Ltd is expected to generate 0.77 times more return on investment than Wartsila Oyj. However, THK Co Ltd is 1.3 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 0.0 per unit of risk. If you would invest 1,133 in THK Co Ltd on September 3, 2024 and sell it today you would earn a total of 67.00 from holding THK Co Ltd or generate 5.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.32% |
| Values | Daily Returns |
THK Co Ltd vs. Wartsila Oyj Abp
Performance |
| Timeline |
| THK Co |
| Wartsila Oyj Abp |
THK Co and Wartsila Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THK Co and Wartsila Oyj
The main advantage of trading using opposite THK Co and Wartsila Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THK Co 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.| THK Co vs. Dear Cashmere Holding | THK Co vs. Goff Corp | THK Co vs. Wialan Technologies | THK Co vs. Cgrowth Capital |
| Wartsila Oyj vs. Sandvik AB ADR | Wartsila Oyj vs. Rockwell Automation | Wartsila Oyj vs. Park Ohio Holdings | Wartsila Oyj vs. Gates Industrial |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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