Correlation Between Wartsila Oyj and Aktia Bank
Can any of the company-specific risk be diversified away by investing in both Wartsila Oyj and Aktia Bank 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 Wartsila Oyj and Aktia Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wartsila Oyj Abp and Aktia Bank Abp, you can compare the effects of market volatilities on Wartsila Oyj and Aktia Bank 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 Wartsila Oyj with a short position of Aktia Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wartsila Oyj and Aktia Bank.
Diversification Opportunities for Wartsila Oyj and Aktia Bank
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wartsila and Aktia is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Wartsila Oyj Abp and Aktia Bank Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aktia Bank Abp and Wartsila 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 Wartsila Oyj Abp are associated (or correlated) with Aktia Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aktia Bank Abp has no effect on the direction of Wartsila Oyj i.e., Wartsila Oyj and Aktia Bank go up and down completely randomly.
Pair Corralation between Wartsila Oyj and Aktia Bank
Assuming the 90 days trading horizon Wartsila Oyj Abp is expected to generate 3.41 times more return on investment than Aktia Bank. However, Wartsila Oyj is 3.41 times more volatile than Aktia Bank Abp. It trades about 0.09 of its potential returns per unit of risk. Aktia Bank Abp is currently generating about 0.22 per unit of risk. If you would invest 1,793 in Wartsila Oyj Abp on November 18, 2024 and sell it today you would earn a total of 68.00 from holding Wartsila Oyj Abp or generate 3.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wartsila Oyj Abp vs. Aktia Bank Abp
Performance |
| Timeline |
| Wartsila Oyj Abp |
| Aktia Bank Abp |
Wartsila Oyj and Aktia Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wartsila Oyj and Aktia Bank
The main advantage of trading using opposite Wartsila Oyj and Aktia Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wartsila Oyj position performs unexpectedly, Aktia Bank 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 Aktia Bank will offset losses from the drop in Aktia Bank's long position.| Wartsila Oyj vs. Sampo Oyj A | Wartsila Oyj vs. Fortum Oyj | Wartsila Oyj vs. UPM Kymmene Oyj | Wartsila Oyj vs. Nordea Bank Abp |
| Aktia Bank vs. Sampo Oyj A | Aktia Bank vs. Tokmanni Group Oyj | Aktia Bank vs. Nordea Bank Abp | Aktia Bank vs. TietoEVRY Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |