Correlation Between Kemira Oyj and Alma Media

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

By analyzing existing cross correlation between Kemira Oyj and Alma Media Oyj, you can compare the effects of market volatilities on Kemira Oyj and Alma Media 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 Alma Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kemira Oyj and Alma Media.

Diversification Opportunities for Kemira Oyj and Alma Media

-0.3

Correlation Coefficient

Kemira Oyj  Alma Media

Very good diversification

The 3 months correlation between Kemira and Alma is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Kemira Oyj and Alma Media Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alma Media 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 Alma Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alma Media Oyj has no effect on the direction of Kemira Oyj i.e., Kemira Oyj and Alma Media go up and down completely randomly.

Pair Corralation between Kemira Oyj and Alma Media

Assuming the 90 days trading horizon Kemira Oyj is expected to under-perform the Alma Media. But the stock apears to be less risky and, when comparing its historical volatility, Kemira Oyj is 1.19 times less risky than Alma Media. The stock trades about -0.05 of its potential returns per unit of risk. The Alma Media Oyj is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,070  in Alma Media Oyj on September 12, 2024 and sell it today you would earn a total of  120.00  from holding Alma Media Oyj or generate 11.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Kemira Oyj  vs.  Alma Media Oyj

Kemira Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kemira Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Kemira Oyj is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Alma Media Oyj

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alma Media Oyj are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Alma Media may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kemira Oyj and Alma Media

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

The idea behind Kemira Oyj and Alma Media 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.