Correlation Between Vincit Group and Sanoma Oyj

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

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

Diversification Opportunities for Vincit Group and Sanoma Oyj

-0.83

Correlation Coefficient

Vincit Group  Sanoma Oyj

Pay attention - limited upside

The 3 months correlation between Vincit and Sanoma is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Vincit Group Oyj and Sanoma Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanoma Oyj and Vincit Group 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 Vincit Group Oyj are associated (or correlated) with Sanoma Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanoma Oyj has no effect on the direction of Vincit Group i.e., Vincit Group and Sanoma Oyj go up and down completely randomly.

Pair Corralation between Vincit Group and Sanoma Oyj

Assuming the 90 days trading horizon Vincit Group Oyj is expected to under-perform the Sanoma Oyj. In addition to that, Vincit Group is 1.57 times more volatile than Sanoma Oyj. It trades about -0.1 of its total potential returns per unit of risk. Sanoma Oyj is currently generating about 0.36 per unit of volatility. If you would invest  704.00  in Sanoma Oyj on September 28, 2024 and sell it today you would earn a total of  75.00  from holding Sanoma Oyj or generate 10.65% return on investment over 90 days.

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

Vincit Group Oyj  vs.  Sanoma Oyj

Vincit Group Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vincit 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 basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sanoma Oyj

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sanoma Oyj are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sanoma Oyj sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vincit Group and Sanoma Oyj

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

The idea behind Vincit Group Oyj and Sanoma 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..