Correlation Between TietoEVRY Corp and Detection Technology

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

By analyzing existing cross correlation between TietoEVRY Corp and Detection Technology OY, you can compare the effects of market volatilities on TietoEVRY Corp and Detection Technology 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 TietoEVRY Corp with a short position of Detection Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of TietoEVRY Corp and Detection Technology.

Diversification Opportunities for TietoEVRY Corp and Detection Technology

0.69

Correlation Coefficient

TietoEVRY Corp  Detection Technology

Poor diversification

The 3 months correlation between TietoEVRY and Detection is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding TietoEVRY Corp and Detection Technology OY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Detection Technology and TietoEVRY Corp 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 TietoEVRY Corp are associated (or correlated) with Detection Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Detection Technology has no effect on the direction of TietoEVRY Corp i.e., TietoEVRY Corp and Detection Technology go up and down completely randomly.

Pair Corralation between TietoEVRY Corp and Detection Technology

Assuming the 90 days trading horizon TietoEVRY Corp is expected to generate 1.25 times less return on investment than Detection Technology. But when comparing it to its historical volatility, TietoEVRY Corp is 1.51 times less risky than Detection Technology. It trades about 0.08 of its potential returns per unit of risk. Detection Technology OY is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,450  in Detection Technology OY on December 2, 2024 and sell it today you would earn a total of  100.00  from holding Detection Technology OY or generate 6.9% return on investment over 90 days.

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

TietoEVRY Corp  vs.  Detection Technology OY

TietoEVRY Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TietoEVRY Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, TietoEVRY Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Detection Technology

Risk-Adjusted Performance

Modest

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

Pair Trading with TietoEVRY Corp and Detection Technology

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

The idea behind TietoEVRY Corp and Detection Technology 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.