Correlation Between Tokmanni Group and Orion Oyj

Can any of the company-specific risk be diversified away by investing in both Tokmanni Group and Orion 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 Orion 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 Orion Oyj B, you can compare the effects of market volatilities on Tokmanni Group and Orion 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 Orion Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tokmanni Group and Orion Oyj.

Diversification Opportunities for Tokmanni Group and Orion Oyj

0.89

Correlation Coefficient

Tokmanni Group  Orion Oyj

Very poor diversification

The 3 months correlation between Tokmanni and Orion is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Tokmanni Group Oyj and Orion Oyj B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orion Oyj B 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 Orion Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orion Oyj B has no effect on the direction of Tokmanni Group i.e., Tokmanni Group and Orion Oyj go up and down completely randomly.

Pair Corralation between Tokmanni Group and Orion Oyj

Assuming the 90 days trading horizon Tokmanni Group is expected to generate 1.44 times less return on investment than Orion Oyj. But when comparing it to its historical volatility, Tokmanni Group Oyj is 1.37 times less risky than Orion Oyj. It trades about 0.19 of its potential returns per unit of risk. Orion Oyj B is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  4,440  in Orion Oyj B on December 1, 2024 and sell it today you would earn a total of  978.00  from holding Orion Oyj B or generate 22.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.31%
Values	Daily Returns

Tokmanni Group Oyj  vs.  Orion Oyj B

Tokmanni Group Oyj

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tokmanni Group Oyj are ranked lower than 14 (%) 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.

Orion Oyj B

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Orion Oyj B are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Orion Oyj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tokmanni Group and Orion Oyj

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

The idea behind Tokmanni Group Oyj and Orion Oyj B 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.