Correlation Between TietoEVRY Oyj and Bouvet

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

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

Diversification Opportunities for TietoEVRY Oyj and Bouvet

0.52

Correlation Coefficient

TietoEVRY Oyj  Bouvet

Very weak diversification

The 3 months correlation between TietoEVRY and Bouvet is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding TietoEVRY Oyj and Bouvet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouvet and TietoEVRY Oyj 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 Oyj are associated (or correlated) with Bouvet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bouvet has no effect on the direction of TietoEVRY Oyj i.e., TietoEVRY Oyj and Bouvet go up and down completely randomly.

Pair Corralation between TietoEVRY Oyj and Bouvet

Assuming the 90 days trading horizon TietoEVRY Oyj is expected to generate 0.94 times more return on investment than Bouvet. However, TietoEVRY Oyj is 1.06 times less risky than Bouvet. It trades about 0.08 of its potential returns per unit of risk. Bouvet is currently generating about 0.0 per unit of risk. If you would invest  19,870  in TietoEVRY Oyj on December 1, 2024 and sell it today you would earn a total of  1,330  from holding TietoEVRY Oyj or generate 6.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

TietoEVRY Oyj  vs.  Bouvet

TietoEVRY Oyj

Risk-Adjusted Performance

Modest

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

Bouvet

Risk-Adjusted Performance

Very Weak

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

Pair Trading with TietoEVRY Oyj and Bouvet

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

The idea behind TietoEVRY Oyj and Bouvet 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.