Correlation Between AS Tallink and Viking Line

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

Diversification Opportunities for AS Tallink and Viking Line

0.68

Correlation Coefficient

AS Tallink  Viking Line

Poor diversification

The 3 months correlation between TALLINK and Viking is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding AS Tallink Grupp and Viking Line Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viking Line Abp 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 Viking Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viking Line Abp has no effect on the direction of AS Tallink i.e., AS Tallink and Viking Line go up and down completely randomly.

Pair Corralation between AS Tallink and Viking Line

Assuming the 90 days trading horizon AS Tallink Grupp is expected to generate 0.66 times more return on investment than Viking Line. However, AS Tallink Grupp is 1.51 times less risky than Viking Line. It trades about 0.15 of its potential returns per unit of risk. Viking Line Abp is currently generating about 0.07 per unit of risk. If you would invest  57.00  in AS Tallink Grupp on December 24, 2024 and sell it today you would earn a total of  7.00  from holding AS Tallink Grupp or generate 12.28% 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.  Viking Line Abp

AS Tallink Grupp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AS Tallink Grupp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent essential indicators, AS Tallink disclosed solid returns over the last few months and may actually be approaching a breakup point.

Viking Line Abp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Viking Line Abp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Viking Line may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with AS Tallink and Viking Line

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

The idea behind AS Tallink Grupp and Viking Line Abp 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .