Correlation Between Viafin Service and Uponor Oyj

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

Diversification Opportunities for Viafin Service and Uponor Oyj

0.89

Correlation Coefficient

Viafin Service  Uponor Oyj

Very poor diversification

The 3 months correlation between Viafin and Uponor is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Viafin Service Oyj and Uponor Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uponor Oyj 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 Uponor Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uponor Oyj has no effect on the direction of Viafin Service i.e., Viafin Service and Uponor Oyj go up and down completely randomly.

Pair Corralation between Viafin Service and Uponor Oyj

Assuming the 90 days trading horizon Viafin Service Oyj is expected to generate 15.53 times more return on investment than Uponor Oyj. However, Viafin Service is 15.53 times more volatile than Uponor Oyj. It trades about 0.19 of its potential returns per unit of risk. Uponor Oyj is currently generating about 0.13 per unit of risk. If you would invest  1,509  in Viafin Service Oyj on January 28, 2024 and sell it today you would earn a total of  121.00  from holding Viafin Service Oyj or generate 8.02% return on investment over 90 days.

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

Viafin Service Oyj  vs.  Uponor Oyj

Viafin Service Oyj

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Viafin Service Oyj are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady forward indicators, Viafin Service sustained solid returns over the last few months and may actually be approaching a breakup point.

Uponor Oyj

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Uponor Oyj are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Uponor 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 Uponor Oyj

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

The idea behind Viafin Service Oyj and Uponor 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.