Correlation Between Alma Media and Sotkamo Silver
Can any of the company-specific risk be diversified away by investing in both Alma Media and Sotkamo Silver 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 Sotkamo Silver 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 Sotkamo Silver AB, you can compare the effects of market volatilities on Alma Media and Sotkamo Silver 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 Sotkamo Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alma Media and Sotkamo Silver.
Diversification Opportunities for Alma Media and Sotkamo Silver
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Alma and Sotkamo is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Alma Media Oyj and Sotkamo Silver AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sotkamo Silver AB 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 Sotkamo Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sotkamo Silver AB has no effect on the direction of Alma Media i.e., Alma Media and Sotkamo Silver go up and down completely randomly.
Pair Corralation between Alma Media and Sotkamo Silver
Assuming the 90 days trading horizon Alma Media is expected to generate 1.57 times less return on investment than Sotkamo Silver. But when comparing it to its historical volatility, Alma Media Oyj is 2.53 times less risky than Sotkamo Silver. It trades about 0.11 of its potential returns per unit of risk. Sotkamo Silver AB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 8.00 in Sotkamo Silver AB on September 2, 2024 and sell it today you would earn a total of 1.17 from holding Sotkamo Silver AB or generate 14.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alma Media Oyj vs. Sotkamo Silver AB
Performance |
| Timeline |
| Alma Media Oyj |
| Sotkamo Silver AB |
Alma Media and Sotkamo Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alma Media and Sotkamo Silver
The main advantage of trading using opposite Alma Media and Sotkamo Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alma Media position performs unexpectedly, Sotkamo Silver 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 Sotkamo Silver will offset losses from the drop in Sotkamo Silver's long position.| Alma Media vs. Tokmanni Group Oyj | Alma Media vs. Kemira Oyj | Alma Media vs. Elisa Oyj | Alma Media vs. Valmet Oyj |
| Sotkamo Silver vs. Outokumpu Oyj | Sotkamo Silver vs. Finnair Oyj | Sotkamo Silver vs. SSAB AB ser | Sotkamo Silver vs. Telia Company AB |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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