Correlation Between SSAB AB and Verkkokauppa Oyj

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

Diversification Opportunities for SSAB AB and Verkkokauppa Oyj

0.95

Correlation Coefficient

SSAB AB  Verkkokauppa Oyj

Almost no diversification

The 3 months correlation between SSAB and Verkkokauppa is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding SSAB AB ser and Verkkokauppa Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verkkokauppa Oyj 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 Verkkokauppa Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verkkokauppa Oyj has no effect on the direction of SSAB AB i.e., SSAB AB and Verkkokauppa Oyj go up and down completely randomly.

Pair Corralation between SSAB AB and Verkkokauppa Oyj

Assuming the 90 days trading horizon SSAB AB is expected to generate 1.02 times less return on investment than Verkkokauppa Oyj. But when comparing it to its historical volatility, SSAB AB ser is 1.52 times less risky than Verkkokauppa Oyj. It trades about 0.34 of its potential returns per unit of risk. Verkkokauppa Oyj is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  130.00  in Verkkokauppa Oyj on December 25, 2024 and sell it today you would earn a total of  80.00  from holding Verkkokauppa Oyj or generate 61.54% return on investment over 90 days.

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

SSAB AB ser  vs.  Verkkokauppa Oyj

SSAB AB ser

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in SSAB AB ser are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, SSAB AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Verkkokauppa Oyj

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Verkkokauppa Oyj are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Verkkokauppa Oyj exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SSAB AB and Verkkokauppa Oyj

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

The idea behind SSAB AB ser and Verkkokauppa 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.