Correlation Between Orion Oyj and TietoEVRY Corp

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

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

Diversification Opportunities for Orion Oyj and TietoEVRY Corp

0.43

Correlation Coefficient

Orion Oyj  TietoEVRY Corp

Very weak diversification

The 3 months correlation between Orion and TietoEVRY is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Orion Oyj B and TietoEVRY Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TietoEVRY Corp and Orion 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 Orion Oyj B are associated (or correlated) with TietoEVRY Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TietoEVRY Corp has no effect on the direction of Orion Oyj i.e., Orion Oyj and TietoEVRY Corp go up and down completely randomly.

Pair Corralation between Orion Oyj and TietoEVRY Corp

Assuming the 90 days trading horizon Orion Oyj B is expected to under-perform the TietoEVRY Corp. But the stock apears to be less risky and, when comparing its historical volatility, Orion Oyj B is 1.26 times less risky than TietoEVRY Corp. The stock trades about -0.1 of its potential returns per unit of risk. The TietoEVRY Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,799  in TietoEVRY Corp on September 15, 2024 and sell it today you would lose (52.00) from holding TietoEVRY Corp or give up 2.89% of portfolio value over 90 days.

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

Orion Oyj B  vs.  TietoEVRY Corp

Orion Oyj B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orion Oyj B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

TietoEVRY Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TietoEVRY Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, TietoEVRY Corp is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Orion Oyj and TietoEVRY Corp

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

The idea behind Orion Oyj B and TietoEVRY 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.