Correlation Between United Bankers and Fortum Oyj
Can any of the company-specific risk be diversified away by investing in both United Bankers and Fortum 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 United Bankers and Fortum Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Bankers Oyj and Fortum Oyj, you can compare the effects of market volatilities on United Bankers and Fortum 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 United Bankers with a short position of Fortum Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Bankers and Fortum Oyj.
Diversification Opportunities for United Bankers and Fortum Oyj
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between United and Fortum is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding United Bankers Oyj and Fortum Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortum Oyj and United Bankers 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 United Bankers Oyj are associated (or correlated) with Fortum Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortum Oyj has no effect on the direction of United Bankers i.e., United Bankers and Fortum Oyj go up and down completely randomly.
Pair Corralation between United Bankers and Fortum Oyj
Assuming the 90 days trading horizon United Bankers is expected to generate 3.2 times less return on investment than Fortum Oyj. But when comparing it to its historical volatility, United Bankers Oyj is 1.47 times less risky than Fortum Oyj. It trades about 0.06 of its potential returns per unit of risk. Fortum Oyj is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,366 in Fortum Oyj on September 4, 2024 and sell it today you would earn a total of 77.00 from holding Fortum Oyj or generate 5.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Bankers Oyj vs. Fortum Oyj
Performance |
| Timeline |
| United Bankers Oyj |
| Fortum Oyj |
United Bankers and Fortum Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Bankers and Fortum Oyj
The main advantage of trading using opposite United Bankers and Fortum Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Bankers position performs unexpectedly, Fortum 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 Fortum Oyj will offset losses from the drop in Fortum Oyj's long position.| United Bankers vs. CapMan Oyj B | United Bankers vs. HKFoods Oyj A | United Bankers vs. KONE Oyj | United Bankers vs. Solteq PLC |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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