Correlation Between Wartsila Oyj and Robit Oyj

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

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

Diversification Opportunities for Wartsila Oyj and Robit Oyj

0.9

Correlation Coefficient

Wartsila Oyj  Robit Oyj

Almost no diversification

The 3 months correlation between Wartsila and Robit is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Wartsila Oyj Abp and Robit Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Robit Oyj and Wartsila 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 Wartsila Oyj Abp are associated (or correlated) with Robit Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Robit Oyj has no effect on the direction of Wartsila Oyj i.e., Wartsila Oyj and Robit Oyj go up and down completely randomly.

Pair Corralation between Wartsila Oyj and Robit Oyj

Assuming the 90 days trading horizon Wartsila Oyj Abp is expected to generate 1.06 times more return on investment than Robit Oyj. However, Wartsila Oyj is 1.06 times more volatile than Robit Oyj. It trades about -0.1 of its potential returns per unit of risk. Robit Oyj is currently generating about -0.16 per unit of risk. If you would invest  2,010  in Wartsila Oyj Abp on September 28, 2024 and sell it today you would lose (305.00) from holding Wartsila Oyj Abp or give up 15.17% of portfolio value over 90 days.

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

Wartsila Oyj Abp  vs.  Robit Oyj

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.

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.

Pair Trading with Wartsila Oyj and Robit Oyj

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

The idea behind Wartsila Oyj Abp and Robit 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..