Correlation Between Viking Line and AS Tallink

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

By analyzing existing cross correlation between Viking Line Abp and AS Tallink Grupp, you can compare the effects of market volatilities on Viking Line and AS Tallink 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 Viking Line with a short position of AS Tallink. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viking Line and AS Tallink.

Diversification Opportunities for Viking Line and AS Tallink

0.68

Correlation Coefficient

Viking Line  AS Tallink

Poor diversification

The 3 months correlation between Viking and TALLINK is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Viking Line Abp and AS Tallink Grupp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AS Tallink Grupp and Viking Line 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 Viking Line Abp are associated (or correlated) with AS Tallink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AS Tallink Grupp has no effect on the direction of Viking Line i.e., Viking Line and AS Tallink go up and down completely randomly.

Pair Corralation between Viking Line and AS Tallink

Assuming the 90 days trading horizon Viking Line is expected to generate 2.04 times less return on investment than AS Tallink. In addition to that, Viking Line is 1.54 times more volatile than AS Tallink Grupp. It trades about 0.04 of its total potential returns per unit of risk. AS Tallink Grupp is currently generating about 0.13 per unit of volatility. If you would invest  57.00  in AS Tallink Grupp on December 25, 2024 and sell it today you would earn a total of  6.00  from holding AS Tallink Grupp or generate 10.53% return on investment over 90 days.

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

Viking Line Abp  vs.  AS Tallink Grupp

Viking Line Abp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Viking Line Abp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Viking Line is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

AS Tallink Grupp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AS Tallink Grupp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent essential indicators, AS Tallink may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Viking Line and AS Tallink

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

The idea behind Viking Line Abp and AS Tallink Grupp 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.