Correlation Between Sampo Oyj and Oriola KD

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

Diversification Opportunities for Sampo Oyj and Oriola KD

0.21

Correlation Coefficient

Sampo Oyj  Oriola KD

Modest diversification

The 3 months correlation between Sampo and Oriola is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sampo Oyj A and Oriola KD Oyj B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriola KD 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 Oriola KD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriola KD Oyj has no effect on the direction of Sampo Oyj i.e., Sampo Oyj and Oriola KD go up and down completely randomly.

Pair Corralation between Sampo Oyj and Oriola KD

Assuming the 90 days trading horizon Sampo Oyj A is expected to under-perform the Oriola KD. But the stock apears to be less risky and, when comparing its historical volatility, Sampo Oyj A is 1.77 times less risky than Oriola KD. The stock trades about -0.09 of its potential returns per unit of risk. The Oriola KD Oyj B is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  94.00  in Oriola KD Oyj B on October 10, 2024 and sell it today you would earn a total of  1.00  from holding Oriola KD Oyj B or generate 1.06% return on investment over 90 days.

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

Sampo Oyj A  vs.  Oriola KD Oyj B

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.

Oriola KD Oyj

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oriola KD Oyj B are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Oriola KD is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Sampo Oyj and Oriola KD

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

The idea behind Sampo Oyj A and Oriola KD Oyj B 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.