Correlation Between EQ Oyj and Cargotec Oyj

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

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

Diversification Opportunities for EQ Oyj and Cargotec Oyj

-0.38

Correlation Coefficient

EQ Oyj  Cargotec Oyj

Very good diversification

The 3 months correlation between EQV1V and Cargotec is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding eQ Oyj and Cargotec Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cargotec Oyj and EQ 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 eQ Oyj are associated (or correlated) with Cargotec Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cargotec Oyj has no effect on the direction of EQ Oyj i.e., EQ Oyj and Cargotec Oyj go up and down completely randomly.

Pair Corralation between EQ Oyj and Cargotec Oyj

Assuming the 90 days trading horizon eQ Oyj is expected to under-perform the Cargotec Oyj. But the stock apears to be less risky and, when comparing its historical volatility, eQ Oyj is 2.16 times less risky than Cargotec Oyj. The stock trades about -0.12 of its potential returns per unit of risk. The Cargotec Oyj is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  4,562  in Cargotec Oyj on September 15, 2024 and sell it today you would earn a total of  824.00  from holding Cargotec Oyj or generate 18.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

eQ Oyj  vs.  Cargotec Oyj

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.

Cargotec Oyj

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cargotec Oyj are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Cargotec Oyj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EQ Oyj and Cargotec Oyj

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

The idea behind eQ Oyj and Cargotec 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.