Correlation Between Etteplan Oyj and Scanfil Oyj

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

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

Diversification Opportunities for Etteplan Oyj and Scanfil Oyj

0.05

Correlation Coefficient

Etteplan Oyj  Scanfil Oyj

Significant diversification

The 3 months correlation between Etteplan and Scanfil is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Etteplan Oyj and Scanfil Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scanfil Oyj and Etteplan 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 Etteplan Oyj are associated (or correlated) with Scanfil Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scanfil Oyj has no effect on the direction of Etteplan Oyj i.e., Etteplan Oyj and Scanfil Oyj go up and down completely randomly.

Pair Corralation between Etteplan Oyj and Scanfil Oyj

Assuming the 90 days trading horizon Etteplan Oyj is expected to under-perform the Scanfil Oyj. But the stock apears to be less risky and, when comparing its historical volatility, Etteplan Oyj is 1.03 times less risky than Scanfil Oyj. The stock trades about -0.14 of its potential returns per unit of risk. The Scanfil Oyj is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  812.00  in Scanfil Oyj on September 4, 2024 and sell it today you would lose (15.00) from holding Scanfil Oyj or give up 1.85% of portfolio value over 90 days.

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

Etteplan Oyj  vs.  Scanfil Oyj

Etteplan Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Etteplan Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Scanfil Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Etteplan Oyj and Scanfil Oyj

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

The idea behind Etteplan Oyj and Scanfil 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.