Correlation Between Vincit Group and Valmet Oyj
Can any of the company-specific risk be diversified away by investing in both Vincit Group and Valmet 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 Vincit Group and Valmet Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vincit Group Oyj and Valmet Oyj, you can compare the effects of market volatilities on Vincit Group and Valmet 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 Vincit Group with a short position of Valmet Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vincit Group and Valmet Oyj.
Diversification Opportunities for Vincit Group and Valmet Oyj
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vincit and Valmet is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Vincit Group Oyj and Valmet Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valmet Oyj and Vincit Group 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 Vincit Group Oyj are associated (or correlated) with Valmet Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valmet Oyj has no effect on the direction of Vincit Group i.e., Vincit Group and Valmet Oyj go up and down completely randomly.
Pair Corralation between Vincit Group and Valmet Oyj
Assuming the 90 days trading horizon Vincit Group Oyj is expected to generate 1.03 times more return on investment than Valmet Oyj. However, Vincit Group is 1.03 times more volatile than Valmet Oyj. It trades about -0.06 of its potential returns per unit of risk. Valmet Oyj is currently generating about -0.21 per unit of risk. If you would invest 192.00 in Vincit Group Oyj on September 3, 2024 and sell it today you would lose (4.00) from holding Vincit Group Oyj or give up 2.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vincit Group Oyj vs. Valmet Oyj
Performance |
| Timeline |
| Vincit Group Oyj |
| Valmet Oyj |
Vincit Group and Valmet Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vincit Group and Valmet Oyj
The main advantage of trading using opposite Vincit Group and Valmet Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vincit Group position performs unexpectedly, Valmet 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 Valmet Oyj will offset losses from the drop in Valmet Oyj's long position.| Vincit Group vs. TietoEVRY Corp | Vincit Group vs. Remedy Entertainment Oyj | Vincit Group vs. Harvia Oyj | Vincit Group vs. Qt Group Oyj |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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