Correlation Between Orion Oyj and SSAB AB

Can any of the company-specific risk be diversified away by investing in both Orion Oyj and SSAB AB 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 SSAB AB 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 SSAB AB ser, you can compare the effects of market volatilities on Orion Oyj and SSAB AB 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 SSAB AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orion Oyj and SSAB AB.

Diversification Opportunities for Orion Oyj and SSAB AB

-0.22

Correlation Coefficient

Orion Oyj  SSAB AB

Very good diversification

The 3 months correlation between Orion and SSAB is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Orion Oyj B and SSAB AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSAB AB ser 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 SSAB AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSAB AB ser has no effect on the direction of Orion Oyj i.e., Orion Oyj and SSAB AB go up and down completely randomly.

Pair Corralation between Orion Oyj and SSAB AB

Assuming the 90 days trading horizon Orion Oyj B is expected to under-perform the SSAB AB. But the stock apears to be less risky and, when comparing its historical volatility, Orion Oyj B is 1.55 times less risky than SSAB AB. The stock trades about -0.05 of its potential returns per unit of risk. The SSAB AB ser is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  431.00  in SSAB AB ser on September 2, 2024 and sell it today you would lose (2.00) from holding SSAB AB ser or give up 0.46% of portfolio value over 90 days.

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

Orion Oyj B  vs.  SSAB AB ser

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.

SSAB AB ser

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SSAB AB ser has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SSAB AB is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Orion Oyj and SSAB AB

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

The idea behind Orion Oyj B and SSAB AB ser 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.