Correlation Between CapMan Oyj and Revenio

Can any of the company-specific risk be diversified away by investing in both CapMan Oyj and Revenio 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 Revenio 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 Revenio Group, you can compare the effects of market volatilities on CapMan Oyj and Revenio 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 Revenio. Check out your portfolio center. Please also check ongoing floating volatility patterns of CapMan Oyj and Revenio.

Diversification Opportunities for CapMan Oyj and Revenio

0.76

Correlation Coefficient

CapMan Oyj  Revenio

Poor diversification

The 3 months correlation between CapMan and Revenio is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding CapMan Oyj B and Revenio Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revenio Group 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 Revenio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revenio Group has no effect on the direction of CapMan Oyj i.e., CapMan Oyj and Revenio go up and down completely randomly.

Pair Corralation between CapMan Oyj and Revenio

Assuming the 90 days trading horizon CapMan Oyj B is expected to generate 0.76 times more return on investment than Revenio. However, CapMan Oyj B is 1.32 times less risky than Revenio. It trades about -0.05 of its potential returns per unit of risk. Revenio Group is currently generating about -0.19 per unit of risk. If you would invest  183.00  in CapMan Oyj B on September 28, 2024 and sell it today you would lose (10.00) from holding CapMan Oyj B or give up 5.46% 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.  Revenio Group

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.

Revenio Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Revenio Group 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 technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with CapMan Oyj and Revenio

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

The idea behind CapMan Oyj B and Revenio Group 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.