Correlation Between Valmet Oyj and Etteplan Oyj
Can any of the company-specific risk be diversified away by investing in both Valmet Oyj and Etteplan 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 Etteplan 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 Etteplan Oyj, you can compare the effects of market volatilities on Valmet Oyj and Etteplan 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 Etteplan Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valmet Oyj and Etteplan Oyj.
Diversification Opportunities for Valmet Oyj and Etteplan Oyj
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Valmet and Etteplan is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Valmet Oyj and Etteplan Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Etteplan 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 Etteplan Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Etteplan Oyj has no effect on the direction of Valmet Oyj i.e., Valmet Oyj and Etteplan Oyj go up and down completely randomly.
Pair Corralation between Valmet Oyj and Etteplan Oyj
Assuming the 90 days trading horizon Valmet Oyj is expected to generate 1.27 times more return on investment than Etteplan Oyj. However, Valmet Oyj is 1.27 times more volatile than Etteplan Oyj. It trades about 0.12 of its potential returns per unit of risk. Etteplan Oyj is currently generating about 0.08 per unit of risk. If you would invest 2,616 in Valmet Oyj on November 28, 2024 and sell it today you would earn a total of 112.00 from holding Valmet Oyj or generate 4.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Valmet Oyj vs. Etteplan Oyj
Performance |
| Timeline |
| Valmet Oyj |
| Etteplan Oyj |
Valmet Oyj and Etteplan Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valmet Oyj and Etteplan Oyj
The main advantage of trading using opposite Valmet Oyj and Etteplan Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valmet Oyj position performs unexpectedly, Etteplan 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 Etteplan Oyj will offset losses from the drop in Etteplan Oyj's long position.| Valmet Oyj vs. UPM Kymmene Oyj | Valmet Oyj vs. Wartsila Oyj Abp | Valmet Oyj vs. Sampo Oyj A | Valmet Oyj vs. Konecranes Plc |
| Etteplan Oyj vs. Tokmanni Group Oyj | Etteplan Oyj vs. Konecranes Plc | Etteplan Oyj vs. Lassila Tikanoja Oyj | Etteplan Oyj vs. Metsa Board 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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