Correlation Between EcoUp Oyj and Detection Technology

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

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

Diversification Opportunities for EcoUp Oyj and Detection Technology

0.67

Correlation Coefficient

EcoUp Oyj  Detection Technology

Poor diversification

The 3 months correlation between EcoUp and Detection is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding EcoUp Oyj and Detection Technology OY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Detection Technology and EcoUp 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 EcoUp Oyj are associated (or correlated) with Detection Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Detection Technology has no effect on the direction of EcoUp Oyj i.e., EcoUp Oyj and Detection Technology go up and down completely randomly.

Pair Corralation between EcoUp Oyj and Detection Technology

Assuming the 90 days trading horizon EcoUp Oyj is expected to generate 2.15 times more return on investment than Detection Technology. However, EcoUp Oyj is 2.15 times more volatile than Detection Technology OY. It trades about 0.03 of its potential returns per unit of risk. Detection Technology OY is currently generating about 0.04 per unit of risk. If you would invest  170.00  in EcoUp Oyj on September 17, 2024 and sell it today you would earn a total of  9.00  from holding EcoUp Oyj or generate 5.29% return on investment over 90 days.

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

EcoUp Oyj  vs.  Detection Technology OY

EcoUp Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EcoUp Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, EcoUp Oyj is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Detection Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Detection Technology OY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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 EcoUp Oyj and Detection Technology

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

The idea behind EcoUp Oyj and Detection Technology OY 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.