Correlation Between Sampo Oyj and Digia Oyj

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

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

Diversification Opportunities for Sampo Oyj and Digia Oyj

-0.65

Correlation Coefficient

Sampo Oyj  Digia Oyj

Excellent diversification

The 3 months correlation between Sampo and Digia is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sampo Oyj A and Digia Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digia Oyj and Sampo 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 Sampo Oyj A are associated (or correlated) with Digia Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digia Oyj has no effect on the direction of Sampo Oyj i.e., Sampo Oyj and Digia Oyj go up and down completely randomly.

Pair Corralation between Sampo Oyj and Digia Oyj

Assuming the 90 days trading horizon Sampo Oyj A is expected to under-perform the Digia Oyj. But the stock apears to be less risky and, when comparing its historical volatility, Sampo Oyj A is 1.66 times less risky than Digia Oyj. The stock trades about -0.17 of its potential returns per unit of risk. The Digia Oyj is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  674.00  in Digia Oyj on October 8, 2024 and sell it today you would earn a total of  4.00  from holding Digia Oyj or generate 0.59% return on investment over 90 days.

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

Sampo Oyj A  vs.  Digia Oyj

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.

Digia Oyj

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Digia Oyj are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Digia Oyj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sampo Oyj and Digia Oyj

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

The idea behind Sampo Oyj A and Digia 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.