Correlation Between Tokmanni Group and Talenom Oyj

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

Diversification Opportunities for Tokmanni Group and Talenom Oyj

-0.18

Correlation Coefficient

Tokmanni Group  Talenom Oyj

Good diversification

The 3 months correlation between Tokmanni and Talenom is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Tokmanni Group Oyj and Talenom Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talenom 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 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 Tokmanni Group i.e., Tokmanni Group and Talenom Oyj go up and down completely randomly.

Pair Corralation between Tokmanni Group and Talenom Oyj

Assuming the 90 days trading horizon Tokmanni Group is expected to generate 8.11 times less return on investment than Talenom Oyj. But when comparing it to its historical volatility, Tokmanni Group Oyj is 2.59 times less risky than Talenom Oyj. It trades about 0.08 of its potential returns per unit of risk. Talenom Oyj is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  363.00  in Talenom Oyj on October 5, 2024 and sell it today you would earn a total of  49.00  from holding Talenom Oyj or generate 13.5% return on investment over 90 days.

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

Tokmanni Group Oyj  vs.  Talenom 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.

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 weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Tokmanni Group and Talenom Oyj

The main advantage of trading using opposite Tokmanni Group and Talenom Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tokmanni Group 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 Tokmanni Group Oyj 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.