Correlation Between Viafin Service and CapMan Oyj

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

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

Diversification Opportunities for Viafin Service and CapMan Oyj

-0.71

Correlation Coefficient

Viafin Service  CapMan Oyj

Pay attention - limited upside

The 3 months correlation between Viafin and CapMan is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Viafin Service Oyj and CapMan Oyj B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapMan Oyj B and Viafin Service 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 Viafin Service Oyj are associated (or correlated) with CapMan Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CapMan Oyj B has no effect on the direction of Viafin Service i.e., Viafin Service and CapMan Oyj go up and down completely randomly.

Pair Corralation between Viafin Service and CapMan Oyj

Assuming the 90 days trading horizon Viafin Service Oyj is expected to generate 0.9 times more return on investment than CapMan Oyj. However, Viafin Service Oyj is 1.12 times less risky than CapMan Oyj. It trades about -0.09 of its potential returns per unit of risk. CapMan Oyj B is currently generating about -0.12 per unit of risk. If you would invest  1,940  in Viafin Service Oyj on September 30, 2024 and sell it today you would lose (30.00) from holding Viafin Service Oyj or give up 1.55% of portfolio value over 90 days.

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

Viafin Service Oyj  vs.  CapMan Oyj B

Viafin Service Oyj

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Viafin Service Oyj are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Viafin Service is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

CapMan Oyj B

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Viafin Service and CapMan Oyj

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

The idea behind Viafin Service Oyj and CapMan Oyj B 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.