Correlation Between Detection Technology and Toivo Group

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

Diversification Opportunities for Detection Technology and Toivo Group

0.32

Correlation Coefficient

Detection Technology  Toivo Group

Weak diversification

The 3 months correlation between Detection and Toivo is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Detection Technology OY 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 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 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 Detection Technology i.e., Detection Technology and Toivo Group go up and down completely randomly.

Pair Corralation between Detection Technology and Toivo Group

Assuming the 90 days trading horizon Detection Technology OY is expected to generate 0.62 times more return on investment than Toivo Group. However, Detection Technology OY is 1.61 times less risky than Toivo Group. It trades about -0.13 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  1,595  in Detection Technology OY on December 23, 2024 and sell it today you would lose (75.00) from holding Detection Technology OY or give up 4.7% of portfolio value over 90 days.

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

Detection Technology OY  vs.  Toivo Group Oyj

Detection Technology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Detection Technology OY are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Detection Technology may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Toivo Group Oyj

Risk-Adjusted Performance

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 weak 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 Detection Technology and Toivo Group

The main advantage of trading using opposite Detection Technology and Toivo Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Detection Technology 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 Detection Technology OY 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.