Correlation Between Robit Oyj and Wartsila Oyj

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

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

Diversification Opportunities for Robit Oyj and Wartsila Oyj

0.91

Correlation Coefficient

Robit Oyj  Wartsila Oyj

Almost no diversification

The 3 months correlation between Robit and Wartsila is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Robit Oyj and Wartsila Oyj Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wartsila Oyj Abp and Robit 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 Robit Oyj are associated (or correlated) with Wartsila Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wartsila Oyj Abp has no effect on the direction of Robit Oyj i.e., Robit Oyj and Wartsila Oyj go up and down completely randomly.

Pair Corralation between Robit Oyj and Wartsila Oyj

Assuming the 90 days trading horizon Robit Oyj is expected to under-perform the Wartsila Oyj. But the stock apears to be less risky and, when comparing its historical volatility, Robit Oyj is 1.03 times less risky than Wartsila Oyj. The stock trades about -0.13 of its potential returns per unit of risk. The Wartsila Oyj Abp is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  2,010  in Wartsila Oyj Abp on September 30, 2024 and sell it today you would lose (283.00) from holding Wartsila Oyj Abp or give up 14.08% of portfolio value over 90 days.

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

Robit Oyj  vs.  Wartsila Oyj Abp

Robit Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Robit Oyj 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.

Wartsila Oyj Abp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wartsila Oyj Abp 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 Robit Oyj and Wartsila Oyj

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

The idea behind Robit Oyj and Wartsila Oyj Abp 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.