Correlation Between Valmet Oyj and Fortum Oyj
Can any of the company-specific risk be diversified away by investing in both Valmet Oyj 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 Valmet Oyj and Fortum 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 Fortum Oyj, you can compare the effects of market volatilities on Valmet Oyj 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 Valmet Oyj with a short position of Fortum Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valmet Oyj and Fortum Oyj.
Diversification Opportunities for Valmet Oyj and Fortum Oyj
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Valmet and Fortum is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Valmet Oyj and Fortum Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortum 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 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 Valmet Oyj i.e., Valmet Oyj and Fortum Oyj go up and down completely randomly.
Pair Corralation between Valmet Oyj and Fortum Oyj
Assuming the 90 days trading horizon Valmet Oyj is expected to under-perform the Fortum Oyj. But the stock apears to be less risky and, when comparing its historical volatility, Valmet Oyj is 1.38 times less risky than Fortum Oyj. The stock trades about -0.26 of its potential returns per unit of risk. The Fortum Oyj is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,348 in Fortum Oyj on August 31, 2024 and sell it today you would earn a total of 86.00 from holding Fortum Oyj or generate 6.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valmet Oyj vs. Fortum Oyj
Performance |
| Timeline |
| Valmet Oyj |
| Fortum Oyj |
Valmet Oyj and Fortum Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valmet Oyj and Fortum Oyj
The main advantage of trading using opposite Valmet Oyj and Fortum Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valmet Oyj 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.| Valmet Oyj vs. UPM Kymmene Oyj | Valmet Oyj vs. Wartsila Oyj Abp | Valmet Oyj vs. Sampo Oyj A | Valmet Oyj vs. Konecranes Plc |
| Fortum Oyj vs. HKFoods Oyj A | Fortum Oyj vs. Aiforia Technologies Oyj | Fortum Oyj vs. Nightingale Health Oyj | Fortum Oyj vs. SSH Communications Security |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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