Correlation Between Sampo Oyj and Kempower Oyj

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

Diversification Opportunities for Sampo Oyj and Kempower Oyj

0.66

Correlation Coefficient

Sampo Oyj  Kempower Oyj

Poor diversification

The 3 months correlation between Sampo and Kempower is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Sampo Oyj A and Kempower Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kempower 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 Kempower Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kempower Oyj has no effect on the direction of Sampo Oyj i.e., Sampo Oyj and Kempower Oyj go up and down completely randomly.

Pair Corralation between Sampo Oyj and Kempower Oyj

Assuming the 90 days trading horizon Sampo Oyj A is expected to generate 0.33 times more return on investment than Kempower Oyj. However, Sampo Oyj A is 3.06 times less risky than Kempower Oyj. It trades about -0.06 of its potential returns per unit of risk. Kempower Oyj is currently generating about -0.13 per unit of risk. If you would invest  4,011  in Sampo Oyj A on September 12, 2024 and sell it today you would lose (48.00) from holding Sampo Oyj A or give up 1.2% of portfolio value over 90 days.

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

Sampo Oyj A  vs.  Kempower 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.

Kempower Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kempower Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Sampo Oyj and Kempower Oyj

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

The idea behind Sampo Oyj A and Kempower 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.