Correlation Between Alma Media and Metso Oyj
Can any of the company-specific risk be diversified away by investing in both Alma Media and Metso 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 Alma Media and Metso Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alma Media Oyj and Metso Oyj, you can compare the effects of market volatilities on Alma Media and Metso 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 Alma Media with a short position of Metso Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alma Media and Metso Oyj.
Diversification Opportunities for Alma Media and Metso Oyj
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Alma and Metso is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Alma Media Oyj and Metso Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metso Oyj and Alma Media 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 Alma Media Oyj are associated (or correlated) with Metso Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metso Oyj has no effect on the direction of Alma Media i.e., Alma Media and Metso Oyj go up and down completely randomly.
Pair Corralation between Alma Media and Metso Oyj
Assuming the 90 days trading horizon Alma Media Oyj is expected to generate 0.86 times more return on investment than Metso Oyj. However, Alma Media Oyj is 1.16 times less risky than Metso Oyj. It trades about 0.08 of its potential returns per unit of risk. Metso Oyj is currently generating about 0.0 per unit of risk. If you would invest 1,075 in Alma Media Oyj on September 4, 2024 and sell it today you would earn a total of 85.00 from holding Alma Media Oyj or generate 7.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alma Media Oyj vs. Metso Oyj
Performance |
| Timeline |
| Alma Media Oyj |
| Metso Oyj |
Alma Media and Metso Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alma Media and Metso Oyj
The main advantage of trading using opposite Alma Media and Metso Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alma Media position performs unexpectedly, Metso 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 Metso Oyj will offset losses from the drop in Metso Oyj's long position.| Alma Media vs. Tokmanni Group Oyj | Alma Media vs. Kemira Oyj | Alma Media vs. Elisa Oyj | Alma Media vs. Valmet Oyj |
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Check out your portfolio center.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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