Correlation Between Terveystalo and Lassila Tikanoja

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Can any of the company-specific risk be diversified away by investing in both Terveystalo and Lassila Tikanoja 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 Terveystalo and Lassila Tikanoja into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Terveystalo Oy and Lassila Tikanoja Oyj, you can compare the effects of market volatilities on Terveystalo and Lassila Tikanoja 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 Terveystalo with a short position of Lassila Tikanoja. Check out your portfolio center. Please also check ongoing floating volatility patterns of Terveystalo and Lassila Tikanoja.

Diversification Opportunities for Terveystalo and Lassila Tikanoja

-0.61
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Terveystalo and Lassila is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Terveystalo Oy and Lassila Tikanoja Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lassila Tikanoja Oyj and Terveystalo 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 Terveystalo Oy are associated (or correlated) with Lassila Tikanoja. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lassila Tikanoja Oyj has no effect on the direction of Terveystalo i.e., Terveystalo and Lassila Tikanoja go up and down completely randomly.

Pair Corralation between Terveystalo and Lassila Tikanoja

Assuming the 90 days trading horizon Terveystalo Oy is expected to generate 1.48 times more return on investment than Lassila Tikanoja. However, Terveystalo is 1.48 times more volatile than Lassila Tikanoja Oyj. It trades about 0.1 of its potential returns per unit of risk. Lassila Tikanoja Oyj is currently generating about -0.04 per unit of risk. If you would invest  712.00  in Terveystalo Oy on October 3, 2024 and sell it today you would earn a total of  340.00  from holding Terveystalo Oy or generate 47.75% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Terveystalo Oy  vs.  Lassila Tikanoja Oyj

 Performance 
       Timeline  
Terveystalo Oy 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Terveystalo Oy are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Terveystalo demonstrated solid returns over the last few months and may actually be approaching a breakup point.
Lassila Tikanoja Oyj 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Lassila Tikanoja Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Terveystalo and Lassila Tikanoja Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Terveystalo and Lassila Tikanoja

The main advantage of trading using opposite Terveystalo and Lassila Tikanoja positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Terveystalo position performs unexpectedly, Lassila Tikanoja 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 Lassila Tikanoja will offset losses from the drop in Lassila Tikanoja's long position.
The idea behind Terveystalo Oy and Lassila Tikanoja 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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