Correlation Between Wartsila Oyj and Sotkamo Silver
Can any of the company-specific risk be diversified away by investing in both Wartsila Oyj and Sotkamo Silver 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 Sotkamo Silver 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 Sotkamo Silver AB, you can compare the effects of market volatilities on Wartsila Oyj and Sotkamo Silver 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 Sotkamo Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wartsila Oyj and Sotkamo Silver.
Diversification Opportunities for Wartsila Oyj and Sotkamo Silver
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wartsila and Sotkamo is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Wartsila Oyj Abp and Sotkamo Silver AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sotkamo Silver AB 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 Sotkamo Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sotkamo Silver AB has no effect on the direction of Wartsila Oyj i.e., Wartsila Oyj and Sotkamo Silver go up and down completely randomly.
Pair Corralation between Wartsila Oyj and Sotkamo Silver
Assuming the 90 days trading horizon Wartsila Oyj Abp is expected to under-perform the Sotkamo Silver. But the stock apears to be less risky and, when comparing its historical volatility, Wartsila Oyj Abp is 1.48 times less risky than Sotkamo Silver. The stock trades about -0.22 of its potential returns per unit of risk. The Sotkamo Silver AB is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Sotkamo Silver AB on August 29, 2024 and sell it today you would lose (1.70) from holding Sotkamo Silver AB or give up 15.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wartsila Oyj Abp vs. Sotkamo Silver AB
Performance |
| Timeline |
| Wartsila Oyj Abp |
| Sotkamo Silver AB |
Wartsila Oyj and Sotkamo Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wartsila Oyj and Sotkamo Silver
The main advantage of trading using opposite Wartsila Oyj and Sotkamo Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wartsila Oyj position performs unexpectedly, Sotkamo Silver 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 Sotkamo Silver will offset losses from the drop in Sotkamo Silver'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 |
| Sotkamo Silver vs. Outokumpu Oyj | Sotkamo Silver vs. SSAB AB ser | Sotkamo Silver vs. Telia Company AB | Sotkamo Silver vs. Wartsila Oyj Abp |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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