Correlation Between Talenom Oyj and Sampo Oyj

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

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

Diversification Opportunities for Talenom Oyj and Sampo Oyj

0.68

Correlation Coefficient

Talenom Oyj  Sampo Oyj

Poor diversification

The 3 months correlation between Talenom and Sampo is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Talenom Oyj and Sampo Oyj A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sampo Oyj A and Talenom 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 Talenom Oyj are associated (or correlated) with Sampo Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sampo Oyj A has no effect on the direction of Talenom Oyj i.e., Talenom Oyj and Sampo Oyj go up and down completely randomly.

Pair Corralation between Talenom Oyj and Sampo Oyj

Assuming the 90 days trading horizon Talenom Oyj is expected to generate 3.77 times more return on investment than Sampo Oyj. However, Talenom Oyj is 3.77 times more volatile than Sampo Oyj A. It trades about 0.2 of its potential returns per unit of risk. Sampo Oyj A is currently generating about -0.15 per unit of risk. If you would invest  333.00  in Talenom Oyj on September 24, 2024 and sell it today you would earn a total of  42.00  from holding Talenom Oyj or generate 12.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Talenom Oyj  vs.  Sampo Oyj A

Talenom Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Talenom Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Sampo Oyj A

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Talenom Oyj and Sampo Oyj

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

The idea behind Talenom Oyj and Sampo Oyj A 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.