Correlation Between CapMan Oyj and EQ Oyj

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

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

Diversification Opportunities for CapMan Oyj and EQ Oyj

0.61

Correlation Coefficient

CapMan Oyj  EQ Oyj

Poor diversification

The 3 months correlation between CapMan and EQV1V is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding CapMan Oyj B and eQ Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eQ Oyj and CapMan 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 CapMan Oyj B are associated (or correlated) with EQ Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eQ Oyj has no effect on the direction of CapMan Oyj i.e., CapMan Oyj and EQ Oyj go up and down completely randomly.

Pair Corralation between CapMan Oyj and EQ Oyj

Assuming the 90 days trading horizon CapMan Oyj B is expected to generate 1.47 times more return on investment than EQ Oyj. However, CapMan Oyj is 1.47 times more volatile than eQ Oyj. It trades about 0.0 of its potential returns per unit of risk. eQ Oyj is currently generating about -0.12 per unit of risk. If you would invest  173.00  in CapMan Oyj B on September 16, 2024 and sell it today you would lose (1.00) from holding CapMan Oyj B or give up 0.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

CapMan Oyj B  vs.  eQ Oyj

CapMan Oyj B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CapMan Oyj B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CapMan Oyj is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

eQ Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days eQ Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with CapMan Oyj and EQ Oyj

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

The idea behind CapMan Oyj B and eQ Oyj 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 Commodity Directory module to find actively traded commodities issued by global exchanges.