Correlation Between Harvia Oyj and Terveystalo

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

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

Diversification Opportunities for Harvia Oyj and Terveystalo

0.8

Correlation Coefficient

Harvia Oyj  Terveystalo

Very poor diversification

The 3 months correlation between Harvia and Terveystalo is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Harvia Oyj and Terveystalo Oy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terveystalo Oy and Harvia Oyj 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 Harvia Oyj are associated (or correlated) with Terveystalo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terveystalo Oy has no effect on the direction of Harvia Oyj i.e., Harvia Oyj and Terveystalo go up and down completely randomly.

Pair Corralation between Harvia Oyj and Terveystalo

Assuming the 90 days trading horizon Harvia Oyj is expected to generate 1.8 times less return on investment than Terveystalo. In addition to that, Harvia Oyj is 1.14 times more volatile than Terveystalo Oy. It trades about 0.07 of its total potential returns per unit of risk. Terveystalo Oy is currently generating about 0.15 per unit of volatility. If you would invest  1,046  in Terveystalo Oy on December 26, 2024 and sell it today you would earn a total of  170.00  from holding Terveystalo Oy or generate 16.25% return on investment over 90 days.

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

Harvia Oyj  vs.  Terveystalo Oy

Harvia Oyj

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Harvia Oyj are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Harvia Oyj may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Terveystalo Oy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Terveystalo Oy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Terveystalo demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Harvia Oyj and Terveystalo

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

The idea behind Harvia Oyj and Terveystalo Oy 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.