Correlation Between Citycon Oyj and Viking Line

Can any of the company-specific risk be diversified away by investing in both Citycon Oyj and Viking Line 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 Citycon Oyj and Viking Line into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citycon Oyj and Viking Line Abp, you can compare the effects of market volatilities on Citycon Oyj and Viking Line 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 Citycon Oyj with a short position of Viking Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citycon Oyj and Viking Line.

Diversification Opportunities for Citycon Oyj and Viking Line

-0.52

Correlation Coefficient

Citycon Oyj  Viking Line

Excellent diversification

The 3 months correlation between Citycon and Viking is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Citycon Oyj and Viking Line Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viking Line Abp and Citycon 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 Citycon Oyj are associated (or correlated) with Viking Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viking Line Abp has no effect on the direction of Citycon Oyj i.e., Citycon Oyj and Viking Line go up and down completely randomly.

Pair Corralation between Citycon Oyj and Viking Line

Assuming the 90 days trading horizon Citycon Oyj is expected to under-perform the Viking Line. But the stock apears to be less risky and, when comparing its historical volatility, Citycon Oyj is 1.17 times less risky than Viking Line. The stock trades about -0.12 of its potential returns per unit of risk. The Viking Line Abp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,890  in Viking Line Abp on February 7, 2024 and sell it today you would earn a total of  360.00  from holding Viking Line Abp or generate 19.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Citycon Oyj  vs.  Viking Line Abp

Citycon Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citycon Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Viking Line Abp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Viking Line Abp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Viking Line demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citycon Oyj and Viking Line

The main advantage of trading using opposite Citycon Oyj and Viking Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citycon Oyj position performs unexpectedly, Viking Line 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 Viking Line will offset losses from the drop in Viking Line's long position.

The idea behind Citycon Oyj and Viking Line Abp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.