Correlation Between Fortum Oyj and Fiskars Oyj
Can any of the company-specific risk be diversified away by investing in both Fortum Oyj and Fiskars 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 Fortum Oyj and Fiskars Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortum Oyj and Fiskars Oyj Abp, you can compare the effects of market volatilities on Fortum Oyj and Fiskars 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 Fortum Oyj with a short position of Fiskars Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortum Oyj and Fiskars Oyj.
Diversification Opportunities for Fortum Oyj and Fiskars Oyj
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fortum and Fiskars is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Fortum Oyj and Fiskars Oyj Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiskars Oyj Abp and Fortum 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 Fortum Oyj are associated (or correlated) with Fiskars Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiskars Oyj Abp has no effect on the direction of Fortum Oyj i.e., Fortum Oyj and Fiskars Oyj go up and down completely randomly.
Pair Corralation between Fortum Oyj and Fiskars Oyj
Assuming the 90 days trading horizon Fortum Oyj is expected to generate 1.21 times more return on investment than Fiskars Oyj. However, Fortum Oyj is 1.21 times more volatile than Fiskars Oyj Abp. It trades about 0.31 of its potential returns per unit of risk. Fiskars Oyj Abp is currently generating about 0.06 per unit of risk. If you would invest 1,146 in Fortum Oyj on February 3, 2024 and sell it today you would earn a total of 142.00 from holding Fortum Oyj or generate 12.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Fortum Oyj vs. Fiskars Oyj Abp
Performance |
Timeline |
Fortum Oyj |
Fiskars Oyj Abp |
Fortum Oyj and Fiskars Oyj Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fortum Oyj and Fiskars Oyj
The main advantage of trading using opposite Fortum Oyj and Fiskars Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortum Oyj position performs unexpectedly, Fiskars 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 Fiskars Oyj will offset losses from the drop in Fiskars Oyj's long position.Fortum Oyj vs. SSAB AB ser | Fortum Oyj vs. Trainers House Oyj | Fortum Oyj vs. SSAB AB ser | Fortum Oyj vs. Saga Furs Oyj |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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