Correlation Between TietoEVRY Corp and Talenom Oyj

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

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

Diversification Opportunities for TietoEVRY Corp and Talenom Oyj

0.7

Correlation Coefficient

TietoEVRY Corp  Talenom Oyj

Poor diversification

The 3 months correlation between TietoEVRY and Talenom is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding TietoEVRY Corp and Talenom Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talenom Oyj 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 Talenom Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talenom Oyj has no effect on the direction of TietoEVRY Corp i.e., TietoEVRY Corp and Talenom Oyj go up and down completely randomly.

Pair Corralation between TietoEVRY Corp and Talenom Oyj

Assuming the 90 days trading horizon TietoEVRY Corp is expected to generate 0.64 times more return on investment than Talenom Oyj. However, TietoEVRY Corp is 1.57 times less risky than Talenom Oyj. It trades about -0.02 of its potential returns per unit of risk. Talenom Oyj is currently generating about -0.06 per unit of risk. If you would invest  1,958  in TietoEVRY Corp on September 12, 2024 and sell it today you would lose (197.00) from holding TietoEVRY Corp or give up 10.06% of portfolio value over 90 days.

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

TietoEVRY Corp  vs.  Talenom Oyj

TietoEVRY Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TietoEVRY Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, TietoEVRY Corp is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Talenom Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Talenom 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 January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with TietoEVRY Corp and Talenom Oyj

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

The idea behind TietoEVRY Corp and Talenom 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..