Correlation Between Afarak Group and Evli Pankki

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

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

Diversification Opportunities for Afarak Group and Evli Pankki

0.61

Correlation Coefficient

Afarak Group  Evli Pankki

Poor diversification

The 3 months correlation between Afarak and Evli is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Afarak Group Oyj and Evli Pankki Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evli Pankki Oyj and Afarak 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 Afarak Group Oyj are associated (or correlated) with Evli Pankki. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evli Pankki Oyj has no effect on the direction of Afarak Group i.e., Afarak Group and Evli Pankki go up and down completely randomly.

Pair Corralation between Afarak Group and Evli Pankki

Assuming the 90 days trading horizon Afarak Group Oyj is expected to generate 4.84 times more return on investment than Evli Pankki. However, Afarak Group is 4.84 times more volatile than Evli Pankki Oyj. It trades about 0.21 of its potential returns per unit of risk. Evli Pankki Oyj is currently generating about 0.19 per unit of risk. If you would invest  26.00  in Afarak Group Oyj on October 5, 2024 and sell it today you would earn a total of  6.00  from holding Afarak Group Oyj or generate 23.08% return on investment over 90 days.

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

Afarak Group Oyj  vs.  Evli Pankki Oyj

Afarak Group Oyj

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Afarak Group Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly weak technical indicators, Afarak Group may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Evli Pankki Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evli Pankki Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Evli Pankki is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Afarak Group and Evli Pankki

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

The idea behind Afarak Group Oyj and Evli Pankki 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.