Correlation Between Tokmanni Group and Outokumpu Oyj

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

Diversification Opportunities for Tokmanni Group and Outokumpu Oyj

0.52

Correlation Coefficient

Tokmanni Group  Outokumpu Oyj

Very weak diversification

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

Pair Corralation between Tokmanni Group and Outokumpu Oyj

Assuming the 90 days trading horizon Tokmanni Group is expected to generate 4.19 times less return on investment than Outokumpu Oyj. But when comparing it to its historical volatility, Tokmanni Group Oyj is 1.03 times less risky than Outokumpu Oyj. It trades about 0.06 of its potential returns per unit of risk. Outokumpu Oyj is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  290.00  in Outokumpu Oyj on December 25, 2024 and sell it today you would earn a total of  87.00  from holding Outokumpu Oyj or generate 30.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Tokmanni Group Oyj  vs.  Outokumpu Oyj

Tokmanni Group Oyj

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tokmanni Group Oyj are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent forward-looking signals, Tokmanni Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Outokumpu Oyj

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Outokumpu Oyj are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Outokumpu Oyj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tokmanni Group and Outokumpu Oyj

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

The idea behind Tokmanni Group Oyj and Outokumpu 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.