Correlation Between Tokmanni Group and Wartsila Oyj
Can any of the company-specific risk be diversified away by investing in both Tokmanni Group 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 Tokmanni Group and Wartsila Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tokmanni Group Oyj and Wartsila Oyj Abp, you can compare the effects of market volatilities on Tokmanni Group 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 Tokmanni Group with a short position of Wartsila Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tokmanni Group and Wartsila Oyj.
Diversification Opportunities for Tokmanni Group and Wartsila Oyj
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tokmanni and Wartsila is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Tokmanni Group Oyj 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 Tokmanni Group 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 Tokmanni Group Oyj 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 Tokmanni Group i.e., Tokmanni Group and Wartsila Oyj go up and down completely randomly.
Pair Corralation between Tokmanni Group and Wartsila Oyj
Assuming the 90 days trading horizon Tokmanni Group Oyj is expected to generate 1.02 times more return on investment than Wartsila Oyj. However, Tokmanni Group is 1.02 times more volatile than Wartsila Oyj Abp. It trades about 0.13 of its potential returns per unit of risk. Wartsila Oyj Abp is currently generating about -0.13 per unit of risk. If you would invest 1,028 in Tokmanni Group Oyj on August 25, 2024 and sell it today you would earn a total of 102.00 from holding Tokmanni Group Oyj or generate 9.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tokmanni Group Oyj vs. Wartsila Oyj Abp
Performance |
| Timeline |
| Tokmanni Group Oyj |
| Wartsila Oyj Abp |
Tokmanni Group and Wartsila Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tokmanni Group and Wartsila Oyj
The main advantage of trading using opposite Tokmanni Group and Wartsila Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tokmanni Group 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.The idea behind Tokmanni Group Oyj and Wartsila Oyj Abp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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