Correlation Between Revenio and Marimekko Oyj

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

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

Diversification Opportunities for Revenio and Marimekko Oyj

0.6

Correlation Coefficient

Revenio  Marimekko Oyj

Poor diversification

The 3 months correlation between Revenio and Marimekko is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Revenio Group and Marimekko Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marimekko Oyj and Revenio 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 Revenio Group are associated (or correlated) with Marimekko Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marimekko Oyj has no effect on the direction of Revenio i.e., Revenio and Marimekko Oyj go up and down completely randomly.

Pair Corralation between Revenio and Marimekko Oyj

Assuming the 90 days trading horizon Revenio Group is expected to under-perform the Marimekko Oyj. In addition to that, Revenio is 1.03 times more volatile than Marimekko Oyj. It trades about -0.17 of its total potential returns per unit of risk. Marimekko Oyj is currently generating about 0.02 per unit of volatility. If you would invest  1,190  in Marimekko Oyj on September 16, 2024 and sell it today you would earn a total of  14.00  from holding Marimekko Oyj or generate 1.18% return on investment over 90 days.

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

Revenio Group  vs.  Marimekko Oyj

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.

Marimekko Oyj

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Marimekko Oyj are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Marimekko Oyj is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Revenio and Marimekko Oyj

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

The idea behind Revenio Group and Marimekko 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.