Correlation Between Alandsbanken Abp and Alma Media

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

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

Diversification Opportunities for Alandsbanken Abp and Alma Media

0.36

Correlation Coefficient

Alandsbanken Abp  Alma Media

Weak diversification

The 3 months correlation between Alandsbanken and Alma is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Alandsbanken Abp A and Alma Media Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alma Media Oyj and Alandsbanken Abp 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 Alandsbanken Abp A are associated (or correlated) with Alma Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alma Media Oyj has no effect on the direction of Alandsbanken Abp i.e., Alandsbanken Abp and Alma Media go up and down completely randomly.

Pair Corralation between Alandsbanken Abp and Alma Media

Assuming the 90 days trading horizon Alandsbanken Abp A is expected to generate 0.82 times more return on investment than Alma Media. However, Alandsbanken Abp A is 1.23 times less risky than Alma Media. It trades about 0.21 of its potential returns per unit of risk. Alma Media Oyj is currently generating about 0.06 per unit of risk. If you would invest  3,400  in Alandsbanken Abp A on November 29, 2024 and sell it today you would earn a total of  560.00  from holding Alandsbanken Abp A or generate 16.47% return on investment over 90 days.

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

Alandsbanken Abp A  vs.  Alma Media Oyj

Alandsbanken Abp A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alandsbanken Abp A are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Alandsbanken Abp demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Alma Media Oyj

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alma Media Oyj are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Alma Media is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Alandsbanken Abp and Alma Media

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

The idea behind Alandsbanken Abp A and Alma Media 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.