Correlation Between American International and Sampo OYJ

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

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

Diversification Opportunities for American International and Sampo OYJ

0.97

Correlation Coefficient

American International  Sampo OYJ

Almost no diversification

The 3 months correlation between American and Sampo is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding American International Group and Sampo OYJ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sampo OYJ and American International 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 American International Group 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 has no effect on the direction of American International i.e., American International and Sampo OYJ go up and down completely randomly.

Pair Corralation between American International and Sampo OYJ

Considering the 90-day investment horizon American International is expected to generate 1.02 times less return on investment than Sampo OYJ. In addition to that, American International is 1.09 times more volatile than Sampo OYJ. It trades about 0.2 of its total potential returns per unit of risk. Sampo OYJ is currently generating about 0.22 per unit of volatility. If you would invest  1,630  in Sampo OYJ on December 29, 2024 and sell it today you would earn a total of  285.00  from holding Sampo OYJ or generate 17.48% return on investment over 90 days.

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

American International Group  vs.  Sampo OYJ

American International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American International Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent forward indicators, American International reported solid returns over the last few months and may actually be approaching a breakup point.

Sampo OYJ

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sampo OYJ are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Sampo OYJ showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American International and Sampo OYJ

The main advantage of trading using opposite American International and Sampo OYJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American International 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 American International Group and Sampo 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.