Correlation Between Terveystalo and Musti Group

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

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

Diversification Opportunities for Terveystalo and Musti Group

-0.57

Correlation Coefficient

Terveystalo  Musti Group

Excellent diversification

The 3 months correlation between Terveystalo and Musti is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Terveystalo Oy and Musti Group Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Musti Group Oyj and Terveystalo 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 Terveystalo Oy are associated (or correlated) with Musti Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Musti Group Oyj has no effect on the direction of Terveystalo i.e., Terveystalo and Musti Group go up and down completely randomly.

Pair Corralation between Terveystalo and Musti Group

Assuming the 90 days trading horizon Terveystalo Oy is expected to generate 1.63 times more return on investment than Musti Group. However, Terveystalo is 1.63 times more volatile than Musti Group Oyj. It trades about 0.11 of its potential returns per unit of risk. Musti Group Oyj is currently generating about -0.21 per unit of risk. If you would invest  1,010  in Terveystalo Oy on September 30, 2024 and sell it today you would earn a total of  36.00  from holding Terveystalo Oy or generate 3.56% return on investment over 90 days.

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

Terveystalo Oy  vs.  Musti Group Oyj

Terveystalo Oy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Terveystalo Oy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Terveystalo may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Musti Group Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Musti Group Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Terveystalo and Musti Group

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

The idea behind Terveystalo Oy and Musti Group 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.