Correlation Between Wartsila Oyj and Cargotec Oyj
Can any of the company-specific risk be diversified away by investing in both Wartsila Oyj and Cargotec 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 Wartsila Oyj and Cargotec Oyj 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 Cargotec Oyj, you can compare the effects of market volatilities on Wartsila Oyj and Cargotec 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 Wartsila Oyj with a short position of Cargotec Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wartsila Oyj and Cargotec Oyj.
Diversification Opportunities for Wartsila Oyj and Cargotec Oyj
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wartsila and Cargotec is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Wartsila Oyj Abp and Cargotec Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cargotec Oyj 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 Cargotec Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cargotec Oyj has no effect on the direction of Wartsila Oyj i.e., Wartsila Oyj and Cargotec Oyj go up and down completely randomly.
Pair Corralation between Wartsila Oyj and Cargotec Oyj
Assuming the 90 days trading horizon Wartsila Oyj Abp is expected to generate 0.66 times more return on investment than Cargotec Oyj. However, Wartsila Oyj Abp is 1.51 times less risky than Cargotec Oyj. It trades about 0.1 of its potential returns per unit of risk. Cargotec Oyj is currently generating about 0.03 per unit of risk. If you would invest 972.00 in Wartsila Oyj Abp on August 28, 2024 and sell it today you would earn a total of 804.00 from holding Wartsila Oyj Abp or generate 82.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wartsila Oyj Abp vs. Cargotec Oyj
Performance |
| Timeline |
| Wartsila Oyj Abp |
| Cargotec Oyj |
Wartsila Oyj and Cargotec Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wartsila Oyj and Cargotec Oyj
The main advantage of trading using opposite Wartsila Oyj and Cargotec Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wartsila Oyj position performs unexpectedly, Cargotec 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 Cargotec Oyj will offset losses from the drop in Cargotec Oyj's long position.| Wartsila Oyj vs. Aktia Bank Abp | Wartsila Oyj vs. Alandsbanken Abp B | Wartsila Oyj vs. Alandsbanken Abp A | Wartsila Oyj vs. Sampo Oyj A |
| Cargotec Oyj vs. Aktia Bank Abp | Cargotec Oyj vs. Alandsbanken Abp B | Cargotec Oyj vs. Alandsbanken Abp A | Cargotec Oyj vs. Sampo Oyj A |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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