Correlation Between Apetit Oyj and Stora Enso

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Can any of the company-specific risk be diversified away by investing in both Apetit Oyj and Stora Enso 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 Apetit Oyj and Stora Enso into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apetit Oyj and Stora Enso Oyj, you can compare the effects of market volatilities on Apetit Oyj and Stora Enso 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 Apetit Oyj with a short position of Stora Enso. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apetit Oyj and Stora Enso.

Diversification Opportunities for Apetit Oyj and Stora Enso

0.29
  Correlation Coefficient

Modest diversification

The 3 months correlation between Apetit and Stora is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Apetit Oyj and Stora Enso Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stora Enso Oyj and Apetit 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 Apetit Oyj are associated (or correlated) with Stora Enso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stora Enso Oyj has no effect on the direction of Apetit Oyj i.e., Apetit Oyj and Stora Enso go up and down completely randomly.

Pair Corralation between Apetit Oyj and Stora Enso

Assuming the 90 days trading horizon Apetit Oyj is expected to generate 2.94 times less return on investment than Stora Enso. But when comparing it to its historical volatility, Apetit Oyj is 1.73 times less risky than Stora Enso. It trades about 0.19 of its potential returns per unit of risk. Stora Enso Oyj is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  1,148  in Stora Enso Oyj on December 29, 2023 and sell it today you would earn a total of  140.00  from holding Stora Enso Oyj or generate 12.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.65%
ValuesDaily Returns

Apetit Oyj  vs.  Stora Enso Oyj

 Performance 
       Timeline  
Apetit Oyj 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Apetit Oyj are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Apetit Oyj is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
Stora Enso Oyj 

Risk-Adjusted Performance

3 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Stora Enso Oyj are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Stora Enso is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Apetit Oyj and Stora Enso Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Apetit Oyj and Stora Enso

The main advantage of trading using opposite Apetit Oyj and Stora Enso positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apetit Oyj position performs unexpectedly, Stora Enso 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 Stora Enso will offset losses from the drop in Stora Enso's long position.
The idea behind Apetit Oyj and Stora Enso 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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