Correlation Between Alma Media and Trainers House

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

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

Diversification Opportunities for Alma Media and Trainers House

-0.15

Correlation Coefficient

Alma Media  Trainers House

Good diversification

The 3 months correlation between Alma and Trainers is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Alma Media Oyj and Trainers House Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trainers House Oyj and Alma Media 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 Alma Media Oyj are associated (or correlated) with Trainers House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trainers House Oyj has no effect on the direction of Alma Media i.e., Alma Media and Trainers House go up and down completely randomly.

Pair Corralation between Alma Media and Trainers House

Assuming the 90 days trading horizon Alma Media Oyj is expected to under-perform the Trainers House. But the stock apears to be less risky and, when comparing its historical volatility, Alma Media Oyj is 1.84 times less risky than Trainers House. The stock trades about -0.11 of its potential returns per unit of risk. The Trainers House Oyj is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  208.00  in Trainers House Oyj on October 5, 2024 and sell it today you would earn a total of  6.00  from holding Trainers House Oyj or generate 2.88% return on investment over 90 days.

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

Alma Media Oyj  vs.  Trainers House Oyj

Alma Media Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alma Media Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Trainers House Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trainers House Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Trainers House is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Alma Media and Trainers House

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

The idea behind Alma Media Oyj and Trainers House 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.