Correlation Between Valmet Oyj and Cargotec Oyj
Can any of the company-specific risk be diversified away by investing in both Valmet Oyj and Cargotec 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 Valmet Oyj and Cargotec Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valmet Oyj and Cargotec Oyj, you can compare the effects of market volatilities on Valmet Oyj and Cargotec 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 Valmet Oyj with a short position of Cargotec Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valmet Oyj and Cargotec Oyj.
Diversification Opportunities for Valmet Oyj and Cargotec Oyj
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Valmet and Cargotec is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Valmet Oyj and Cargotec Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cargotec Oyj and Valmet 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 Valmet Oyj are associated (or correlated) with Cargotec Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cargotec Oyj has no effect on the direction of Valmet Oyj i.e., Valmet Oyj and Cargotec Oyj go up and down completely randomly.
Pair Corralation between Valmet Oyj and Cargotec Oyj
Assuming the 90 days trading horizon Valmet Oyj is expected to under-perform the Cargotec Oyj. But the stock apears to be less risky and, when comparing its historical volatility, Valmet Oyj is 1.49 times less risky than Cargotec Oyj. The stock trades about -0.19 of its potential returns per unit of risk. The Cargotec Oyj is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 5,558 in Cargotec Oyj on September 1, 2024 and sell it today you would lose (296.00) from holding Cargotec Oyj or give up 5.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Valmet Oyj vs. Cargotec Oyj
Performance |
| Timeline |
| Valmet Oyj |
| Cargotec Oyj |
Valmet Oyj and Cargotec Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valmet Oyj and Cargotec Oyj
The main advantage of trading using opposite Valmet Oyj and Cargotec Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valmet Oyj position performs unexpectedly, Cargotec 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 Cargotec Oyj will offset losses from the drop in Cargotec Oyj's long position.| Valmet Oyj vs. Admicom Oyj | Valmet Oyj vs. Talenom Oyj | Valmet Oyj vs. Vincit Group Oyj | Valmet Oyj vs. Harvia Oyj |
| Cargotec Oyj vs. Admicom Oyj | Cargotec Oyj vs. Talenom Oyj | Cargotec Oyj vs. Vincit Group Oyj | Cargotec Oyj vs. Harvia Oyj |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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