Correlation Between Kemira Oyj and Robit Oyj

Can any of the company-specific risk be diversified away by investing in both Kemira 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 Kemira 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 Kemira Oyj and Robit Oyj, you can compare the effects of market volatilities on Kemira 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 Kemira Oyj with a short position of Robit Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kemira Oyj and Robit Oyj.

Diversification Opportunities for Kemira Oyj and Robit Oyj

0.32

Correlation Coefficient

Kemira Oyj  Robit Oyj

Weak diversification

The 3 months correlation between Kemira and Robit is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Kemira Oyj and Robit Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Robit Oyj and Kemira 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 Kemira Oyj 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 Kemira Oyj i.e., Kemira Oyj and Robit Oyj go up and down completely randomly.

Pair Corralation between Kemira Oyj and Robit Oyj

Assuming the 90 days trading horizon Kemira Oyj is expected to generate 0.62 times more return on investment than Robit Oyj. However, Kemira Oyj is 1.61 times less risky than Robit Oyj. It trades about 0.08 of its potential returns per unit of risk. Robit Oyj is currently generating about 0.0 per unit of risk. If you would invest  1,096  in Kemira Oyj on January 31, 2024 and sell it today you would earn a total of  948.00  from holding Kemira Oyj or generate 86.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Kemira Oyj  vs.  Robit Oyj

Kemira Oyj

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kemira Oyj are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Kemira Oyj sustained solid returns over the last few months and may actually be approaching a breakup point.

Robit Oyj

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Robit Oyj are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Robit Oyj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kemira Oyj and Robit Oyj

The main advantage of trading using opposite Kemira Oyj and Robit Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kemira 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 Kemira Oyj 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.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .