Correlation Between Leofoo Development and Sampo Corp

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

By analyzing existing cross correlation between Leofoo Development Co and Sampo Corp, you can compare the effects of market volatilities on Leofoo Development and Sampo Corp 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 Leofoo Development with a short position of Sampo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leofoo Development and Sampo Corp.

Diversification Opportunities for Leofoo Development and Sampo Corp

-0.47

Correlation Coefficient

Leofoo Development  Sampo Corp

Very good diversification

The 3 months correlation between Leofoo and Sampo is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Leofoo Development Co and Sampo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sampo Corp and Leofoo Development 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 Leofoo Development Co are associated (or correlated) with Sampo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sampo Corp has no effect on the direction of Leofoo Development i.e., Leofoo Development and Sampo Corp go up and down completely randomly.

Pair Corralation between Leofoo Development and Sampo Corp

Assuming the 90 days trading horizon Leofoo Development Co is expected to under-perform the Sampo Corp. In addition to that, Leofoo Development is 1.18 times more volatile than Sampo Corp. It trades about -0.09 of its total potential returns per unit of risk. Sampo Corp is currently generating about 0.03 per unit of volatility. If you would invest  2,810  in Sampo Corp on September 3, 2024 and sell it today you would earn a total of  25.00  from holding Sampo Corp or generate 0.89% return on investment over 90 days.

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

Leofoo Development Co  vs.  Sampo Corp

Leofoo Development

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leofoo Development Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Leofoo Development is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Sampo Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sampo Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Sampo Corp is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Leofoo Development and Sampo Corp

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

The idea behind Leofoo Development Co and Sampo Corp 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.