Correlation Between Alandsbanken Abp and Toivo Group

Can any of the company-specific risk be diversified away by investing in both Alandsbanken Abp and Toivo 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 Alandsbanken Abp and Toivo Group 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 Toivo Group Oyj, you can compare the effects of market volatilities on Alandsbanken Abp and Toivo 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 Alandsbanken Abp with a short position of Toivo Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alandsbanken Abp and Toivo Group.

Diversification Opportunities for Alandsbanken Abp and Toivo Group

-0.04

Correlation Coefficient

Alandsbanken Abp  Toivo Group

Good diversification

The 3 months correlation between Alandsbanken and Toivo is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Alandsbanken Abp A and Toivo Group Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toivo Group 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 Toivo Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toivo Group Oyj has no effect on the direction of Alandsbanken Abp i.e., Alandsbanken Abp and Toivo Group go up and down completely randomly.

Pair Corralation between Alandsbanken Abp and Toivo Group

Assuming the 90 days trading horizon Alandsbanken Abp A is expected to generate 0.47 times more return on investment than Toivo Group. However, Alandsbanken Abp A is 2.12 times less risky than Toivo Group. It trades about 0.09 of its potential returns per unit of risk. Toivo Group Oyj is currently generating about -0.1 per unit of risk. If you would invest  3,470  in Alandsbanken Abp A on October 12, 2024 and sell it today you would earn a total of  70.00  from holding Alandsbanken Abp A or generate 2.02% return on investment over 90 days.

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

Alandsbanken Abp A  vs.  Toivo Group Oyj

Alandsbanken Abp A

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alandsbanken Abp A are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Alandsbanken Abp is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Toivo Group Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Toivo Group Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Alandsbanken Abp and Toivo Group

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

The idea behind Alandsbanken Abp A and Toivo 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.