Correlation Between Wartsila Oyj and Tokmanni Group
Can any of the company-specific risk be diversified away by investing in both Wartsila Oyj and Tokmanni Group 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 Tokmanni Group 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 Tokmanni Group Oyj, you can compare the effects of market volatilities on Wartsila Oyj and Tokmanni Group 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 Tokmanni Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wartsila Oyj and Tokmanni Group.
Diversification Opportunities for Wartsila Oyj and Tokmanni Group
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wartsila and Tokmanni is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Wartsila Oyj Abp and Tokmanni Group Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokmanni Group 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 Tokmanni Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokmanni Group Oyj has no effect on the direction of Wartsila Oyj i.e., Wartsila Oyj and Tokmanni Group go up and down completely randomly.
Pair Corralation between Wartsila Oyj and Tokmanni Group
Assuming the 90 days trading horizon Wartsila Oyj Abp is expected to under-perform the Tokmanni Group. But the stock apears to be less risky and, when comparing its historical volatility, Wartsila Oyj Abp is 1.02 times less risky than Tokmanni Group. The stock trades about -0.13 of its potential returns per unit of risk. The Tokmanni Group Oyj is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,028 in Tokmanni Group Oyj on August 25, 2024 and sell it today you would earn a total of 102.00 from holding Tokmanni Group Oyj or generate 9.92% 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. Tokmanni Group Oyj
Performance |
| Timeline |
| Wartsila Oyj Abp |
| Tokmanni Group Oyj |
Wartsila Oyj and Tokmanni Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wartsila Oyj and Tokmanni Group
The main advantage of trading using opposite Wartsila Oyj and Tokmanni Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wartsila Oyj position performs unexpectedly, Tokmanni Group 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 Tokmanni Group will offset losses from the drop in Tokmanni Group'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 |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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