Correlation Between United Bankers and Toivo Group

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

Diversification Opportunities for United Bankers and Toivo Group

-0.23

Correlation Coefficient

United Bankers  Toivo Group

Very good diversification

The 3 months correlation between United and Toivo is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding United Bankers Oyj and Toivo Group Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toivo Group 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 Toivo Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toivo Group Oyj has no effect on the direction of United Bankers i.e., United Bankers and Toivo Group go up and down completely randomly.

Pair Corralation between United Bankers and Toivo Group

Assuming the 90 days trading horizon United Bankers Oyj is expected to generate 0.73 times more return on investment than Toivo Group. However, United Bankers Oyj is 1.38 times less risky than Toivo Group. It trades about 0.05 of its potential returns per unit of risk. Toivo Group Oyj is currently generating about -0.01 per unit of risk. If you would invest  1,289  in United Bankers Oyj on October 27, 2024 and sell it today you would earn a total of  511.00  from holding United Bankers Oyj or generate 39.64% return on investment over 90 days.

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

United Bankers Oyj  vs.  Toivo Group Oyj

United Bankers Oyj

Risk-Adjusted Performance

0 of 100

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.

Toivo Group Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Toivo Group Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent 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.

Pair Trading with United Bankers and Toivo Group

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

The idea behind United Bankers Oyj and Toivo Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.