Correlation Between Terveystalo and Verkkokauppa Oyj

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

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

Diversification Opportunities for Terveystalo and Verkkokauppa Oyj

-0.61

Correlation Coefficient

Terveystalo  Verkkokauppa Oyj

Excellent diversification

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

Pair Corralation between Terveystalo and Verkkokauppa Oyj

Assuming the 90 days trading horizon Terveystalo Oy is expected to generate 0.76 times more return on investment than Verkkokauppa Oyj. However, Terveystalo Oy is 1.32 times less risky than Verkkokauppa Oyj. It trades about 0.14 of its potential returns per unit of risk. Verkkokauppa Oyj is currently generating about -0.18 per unit of risk. If you would invest  934.00  in Terveystalo Oy on October 3, 2024 and sell it today you would earn a total of  118.00  from holding Terveystalo Oy or generate 12.63% return on investment over 90 days.

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

Terveystalo Oy  vs.  Verkkokauppa Oyj

Terveystalo Oy

Risk-Adjusted Performance

10 of 100

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.

Verkkokauppa Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verkkokauppa 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 Terveystalo and Verkkokauppa Oyj

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

The idea behind Terveystalo Oy and Verkkokauppa 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..