Correlation Between Tokmanni Group and Kesko Oyj

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

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

Diversification Opportunities for Tokmanni Group and Kesko Oyj

0.08

Correlation Coefficient

Tokmanni Group  Kesko Oyj

Significant diversification

The 3 months correlation between Tokmanni and Kesko is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Tokmanni Group Oyj and Kesko Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kesko Oyj and Tokmanni Group 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 Tokmanni Group Oyj are associated (or correlated) with Kesko Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kesko Oyj has no effect on the direction of Tokmanni Group i.e., Tokmanni Group and Kesko Oyj go up and down completely randomly.

Pair Corralation between Tokmanni Group and Kesko Oyj

Assuming the 90 days trading horizon Tokmanni Group Oyj is expected to generate 1.5 times more return on investment than Kesko Oyj. However, Tokmanni Group is 1.5 times more volatile than Kesko Oyj. It trades about 0.12 of its potential returns per unit of risk. Kesko Oyj is currently generating about 0.05 per unit of risk. If you would invest  1,025  in Tokmanni Group Oyj on September 4, 2024 and sell it today you would earn a total of  179.00  from holding Tokmanni Group Oyj or generate 17.46% return on investment over 90 days.

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

Tokmanni Group Oyj  vs.  Kesko Oyj

Tokmanni Group Oyj

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tokmanni Group Oyj are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent forward-looking signals, Tokmanni Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Kesko Oyj

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kesko Oyj are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Kesko Oyj is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tokmanni Group and Kesko Oyj

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

The idea behind Tokmanni Group Oyj and Kesko 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.