Correlation Between Sampo Oyj and Terveystalo

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

Diversification Opportunities for Sampo Oyj and Terveystalo

-0.32

Correlation Coefficient

Sampo Oyj  Terveystalo

Very good diversification

The 3 months correlation between Sampo and Terveystalo is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sampo Oyj A and Terveystalo Oy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terveystalo Oy 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 Terveystalo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terveystalo Oy has no effect on the direction of Sampo Oyj i.e., Sampo Oyj and Terveystalo go up and down completely randomly.

Pair Corralation between Sampo Oyj and Terveystalo

Assuming the 90 days trading horizon Sampo Oyj A is expected to under-perform the Terveystalo. But the stock apears to be less risky and, when comparing its historical volatility, Sampo Oyj A is 1.88 times less risky than Terveystalo. The stock trades about -0.13 of its potential returns per unit of risk. The Terveystalo Oy is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  959.00  in Terveystalo Oy on September 30, 2024 and sell it today you would earn a total of  87.00  from holding Terveystalo Oy or generate 9.07% return on investment over 90 days.

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

Sampo Oyj A  vs.  Terveystalo Oy

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 latest inconsistent performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Terveystalo Oy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Terveystalo Oy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Terveystalo may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sampo Oyj and Terveystalo

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

The idea behind Sampo Oyj A and Terveystalo Oy 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.