Correlation Between Orion Oyj and Lassila Tikanoja

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

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

Diversification Opportunities for Orion Oyj and Lassila Tikanoja

0.88

Correlation Coefficient

Orion Oyj  Lassila Tikanoja

Very poor diversification

The 3 months correlation between Orion and Lassila is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Orion Oyj A and Lassila Tikanoja Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lassila Tikanoja Oyj and Orion 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 Orion Oyj A are associated (or correlated) with Lassila Tikanoja. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lassila Tikanoja Oyj has no effect on the direction of Orion Oyj i.e., Orion Oyj and Lassila Tikanoja go up and down completely randomly.

Pair Corralation between Orion Oyj and Lassila Tikanoja

Assuming the 90 days trading horizon Orion Oyj A is expected to generate 1.75 times more return on investment than Lassila Tikanoja. However, Orion Oyj is 1.75 times more volatile than Lassila Tikanoja Oyj. It trades about 0.27 of its potential returns per unit of risk. Lassila Tikanoja Oyj is currently generating about 0.23 per unit of risk. If you would invest  4,220  in Orion Oyj A on December 23, 2024 and sell it today you would earn a total of  1,470  from holding Orion Oyj A or generate 34.83% return on investment over 90 days.

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

Orion Oyj A  vs.  Lassila Tikanoja Oyj

Orion Oyj A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Orion Oyj A are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Orion Oyj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Lassila Tikanoja Oyj

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lassila Tikanoja Oyj are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Lassila Tikanoja demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orion Oyj and Lassila Tikanoja

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

The idea behind Orion Oyj A and Lassila Tikanoja 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.