Correlation Between SSAB AB and Terveystalo

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

By analyzing existing cross correlation between SSAB AB ser and Terveystalo Oy, you can compare the effects of market volatilities on SSAB AB 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 SSAB AB with a short position of Terveystalo. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSAB AB and Terveystalo.

Diversification Opportunities for SSAB AB and Terveystalo

-0.2

Correlation Coefficient

SSAB AB  Terveystalo

Good diversification

The 3 months correlation between SSAB and Terveystalo is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding SSAB AB ser and Terveystalo Oy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terveystalo Oy and SSAB AB 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 SSAB AB ser 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 SSAB AB i.e., SSAB AB and Terveystalo go up and down completely randomly.

Pair Corralation between SSAB AB and Terveystalo

Assuming the 90 days trading horizon SSAB AB ser is expected to under-perform the Terveystalo. In addition to that, SSAB AB is 1.41 times more volatile than Terveystalo Oy. It trades about -0.31 of its total potential returns per unit of risk. Terveystalo Oy is currently generating about -0.04 per unit of volatility. If you would invest  1,084  in Terveystalo Oy on October 5, 2024 and sell it today you would lose (12.00) from holding Terveystalo Oy or give up 1.11% of portfolio value over 90 days.

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

SSAB AB ser  vs.  Terveystalo Oy

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 inconsistent performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Terveystalo Oy

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with SSAB AB and Terveystalo

The main advantage of trading using opposite SSAB AB and Terveystalo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSAB AB 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 SSAB AB ser 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.