Correlation Between United Bankers and Boreo Oyj

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

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

Diversification Opportunities for United Bankers and Boreo Oyj

-0.52

Correlation Coefficient

United Bankers  Boreo Oyj

Excellent diversification

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

Pair Corralation between United Bankers and Boreo Oyj

Assuming the 90 days trading horizon United Bankers Oyj is expected to under-perform the Boreo Oyj. But the stock apears to be less risky and, when comparing its historical volatility, United Bankers Oyj is 2.0 times less risky than Boreo Oyj. The stock trades about -0.02 of its potential returns per unit of risk. The Boreo Oyj is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,015  in Boreo Oyj on December 1, 2024 and sell it today you would earn a total of  115.00  from holding Boreo Oyj or generate 11.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

United Bankers Oyj  vs.  Boreo Oyj

United Bankers Oyj

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Bankers Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, United Bankers is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Boreo Oyj

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Boreo Oyj are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Boreo Oyj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Bankers and Boreo Oyj

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

The idea behind United Bankers Oyj and Boreo 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.