Correlation Between Detection Technology and Tamtron Group

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

Diversification Opportunities for Detection Technology and Tamtron Group

-0.56

Correlation Coefficient

Detection Technology  Tamtron Group

Excellent diversification

The 3 months correlation between Detection and Tamtron is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Detection Technology OY and Tamtron Group Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tamtron Group 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 Tamtron Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tamtron Group Oyj has no effect on the direction of Detection Technology i.e., Detection Technology and Tamtron Group go up and down completely randomly.

Pair Corralation between Detection Technology and Tamtron Group

Assuming the 90 days trading horizon Detection Technology OY is expected to under-perform the Tamtron Group. In addition to that, Detection Technology is 1.07 times more volatile than Tamtron Group Oyj. It trades about -0.1 of its total potential returns per unit of risk. Tamtron Group Oyj is currently generating about 0.05 per unit of volatility. If you would invest  540.00  in Tamtron Group Oyj on October 25, 2024 and sell it today you would earn a total of  26.00  from holding Tamtron Group Oyj or generate 4.81% return on investment over 90 days.

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

Detection Technology OY  vs.  Tamtron Group 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 latest inconsistent 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.

Tamtron Group Oyj

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tamtron Group Oyj are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Tamtron Group may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Detection Technology and Tamtron Group

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

The idea behind Detection Technology OY and Tamtron 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.