Correlation Between Orion Oyj and Sampo Oyj

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

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

Diversification Opportunities for Orion Oyj and Sampo Oyj

0.56

Correlation Coefficient

Orion Oyj  Sampo Oyj

Very weak diversification

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

Pair Corralation between Orion Oyj and Sampo Oyj

Assuming the 90 days trading horizon Orion Oyj B is expected to under-perform the Sampo Oyj. In addition to that, Orion Oyj is 1.64 times more volatile than Sampo Oyj A. It trades about -0.06 of its total potential returns per unit of risk. Sampo Oyj A is currently generating about -0.01 per unit of volatility. If you would invest  4,097  in Sampo Oyj A on September 3, 2024 and sell it today you would lose (43.00) from holding Sampo Oyj A or give up 1.05% of portfolio value over 90 days.

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

Orion Oyj B  vs.  Sampo Oyj A

Orion Oyj B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orion Oyj B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Orion Oyj is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Sampo Oyj A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sampo Oyj A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Sampo Oyj is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Orion Oyj and Sampo Oyj

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

The idea behind Orion Oyj B and Sampo Oyj A 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.