Correlation Between Stora Enso and Tulikivi Oyj

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

By analyzing existing cross correlation between Stora Enso Oyj and Tulikivi Oyj A, you can compare the effects of market volatilities on Stora Enso and Tulikivi 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 Stora Enso with a short position of Tulikivi Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stora Enso and Tulikivi Oyj.

Diversification Opportunities for Stora Enso and Tulikivi Oyj

0.74

Correlation Coefficient

Stora Enso  Tulikivi Oyj

Poor diversification

The 3 months correlation between Stora and Tulikivi is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Stora Enso Oyj and Tulikivi Oyj A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tulikivi Oyj A and Stora Enso 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 Stora Enso Oyj are associated (or correlated) with Tulikivi Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tulikivi Oyj A has no effect on the direction of Stora Enso i.e., Stora Enso and Tulikivi Oyj go up and down completely randomly.

Pair Corralation between Stora Enso and Tulikivi Oyj

Assuming the 90 days trading horizon Stora Enso Oyj is expected to under-perform the Tulikivi Oyj. But the stock apears to be less risky and, when comparing its historical volatility, Stora Enso Oyj is 1.28 times less risky than Tulikivi Oyj. The stock trades about -0.16 of its potential returns per unit of risk. The Tulikivi Oyj A is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  49.00  in Tulikivi Oyj A on September 2, 2024 and sell it today you would lose (8.00) from holding Tulikivi Oyj A or give up 16.33% of portfolio value over 90 days.

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

Stora Enso Oyj  vs.  Tulikivi Oyj A

Stora Enso Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stora Enso Oyj 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 technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Tulikivi Oyj A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tulikivi Oyj A 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 technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Stora Enso and Tulikivi Oyj

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

The idea behind Stora Enso Oyj and Tulikivi Oyj A 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..