Correlation Between AS Tallink and Aspo Oyj

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

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

Diversification Opportunities for AS Tallink and Aspo Oyj

0.71

Correlation Coefficient

AS Tallink  Aspo Oyj

Poor diversification

The 3 months correlation between TALLINK and Aspo is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding AS Tallink Grupp and Aspo Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspo Oyj and AS Tallink 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 AS Tallink Grupp are associated (or correlated) with Aspo Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspo Oyj has no effect on the direction of AS Tallink i.e., AS Tallink and Aspo Oyj go up and down completely randomly.

Pair Corralation between AS Tallink and Aspo Oyj

Assuming the 90 days trading horizon AS Tallink Grupp is expected to under-perform the Aspo Oyj. But the stock apears to be less risky and, when comparing its historical volatility, AS Tallink Grupp is 1.21 times less risky than Aspo Oyj. The stock trades about -0.1 of its potential returns per unit of risk. The Aspo Oyj is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  502.00  in Aspo Oyj on October 9, 2024 and sell it today you would earn a total of  0.00  from holding Aspo Oyj or generate 0.0% return on investment over 90 days.

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

AS Tallink Grupp  vs.  Aspo Oyj

AS Tallink Grupp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AS Tallink Grupp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, AS Tallink is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Aspo Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aspo Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with AS Tallink and Aspo Oyj

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

The idea behind AS Tallink Grupp and Aspo 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.