Correlation Between Valmet Oyj and PunaMusta Media
Can any of the company-specific risk be diversified away by investing in both Valmet Oyj and PunaMusta Media 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 PunaMusta Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valmet Oyj and PunaMusta Media Oyj, you can compare the effects of market volatilities on Valmet Oyj and PunaMusta Media 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 PunaMusta Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valmet Oyj and PunaMusta Media.
Diversification Opportunities for Valmet Oyj and PunaMusta Media
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Valmet and PunaMusta is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Valmet Oyj and PunaMusta Media Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PunaMusta Media 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 PunaMusta Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PunaMusta Media Oyj has no effect on the direction of Valmet Oyj i.e., Valmet Oyj and PunaMusta Media go up and down completely randomly.
Pair Corralation between Valmet Oyj and PunaMusta Media
Assuming the 90 days trading horizon Valmet Oyj is expected to generate 1.04 times more return on investment than PunaMusta Media. However, Valmet Oyj is 1.04 times more volatile than PunaMusta Media Oyj. It trades about 0.0 of its potential returns per unit of risk. PunaMusta Media Oyj is currently generating about -0.12 per unit of risk. If you would invest 2,337 in Valmet Oyj on September 3, 2024 and sell it today you would lose (118.00) from holding Valmet Oyj or give up 5.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.39% |
| Values | Daily Returns |
Valmet Oyj vs. PunaMusta Media Oyj
Performance |
| Timeline |
| Valmet Oyj |
| PunaMusta Media Oyj |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Valmet Oyj and PunaMusta Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valmet Oyj and PunaMusta Media
The main advantage of trading using opposite Valmet Oyj and PunaMusta Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valmet Oyj position performs unexpectedly, PunaMusta Media 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 PunaMusta Media will offset losses from the drop in PunaMusta Media'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 |
| PunaMusta Media vs. Raute Oyj | PunaMusta Media vs. Suominen Oyj | PunaMusta Media vs. Elecster Oyj A | PunaMusta Media vs. Siili Solutions 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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