Correlation Between Detection Technology and Alma Media

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

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

Diversification Opportunities for Detection Technology and Alma Media

-0.05

Correlation Coefficient

Detection Technology  Alma Media

Good diversification

The 3 months correlation between Detection and Alma is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Detection Technology OY 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 Detection Technology 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 Detection Technology OY 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 Detection Technology i.e., Detection Technology and Alma Media go up and down completely randomly.

Pair Corralation between Detection Technology and Alma Media

Assuming the 90 days trading horizon Detection Technology OY is expected to generate 1.74 times more return on investment than Alma Media. However, Detection Technology is 1.74 times more volatile than Alma Media Oyj. It trades about 0.11 of its potential returns per unit of risk. Alma Media Oyj is currently generating about -0.11 per unit of risk. If you would invest  1,430  in Detection Technology OY on October 5, 2024 and sell it today you would earn a total of  65.00  from holding Detection Technology OY or generate 4.55% return on investment over 90 days.

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

Detection Technology OY  vs.  Alma Media Oyj

Detection Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Detection Technology OY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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.

Pair Trading with Detection Technology and Alma Media

The main advantage of trading using opposite Detection Technology and Alma Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Detection Technology 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 Detection Technology OY 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.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.