Correlation Between EQ Oyj and Sanoma Oyj
Can any of the company-specific risk be diversified away by investing in both EQ Oyj and Sanoma 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 EQ Oyj and Sanoma Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between eQ Oyj and Sanoma Oyj, you can compare the effects of market volatilities on EQ Oyj and Sanoma 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 EQ Oyj with a short position of Sanoma Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of EQ Oyj and Sanoma Oyj.
Diversification Opportunities for EQ Oyj and Sanoma Oyj
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between EQV1V and Sanoma is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding eQ Oyj and Sanoma Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanoma Oyj and EQ Oyj 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 eQ Oyj are associated (or correlated) with Sanoma Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanoma Oyj has no effect on the direction of EQ Oyj i.e., EQ Oyj and Sanoma Oyj go up and down completely randomly.
Pair Corralation between EQ Oyj and Sanoma Oyj
Assuming the 90 days trading horizon eQ Oyj is expected to under-perform the Sanoma Oyj. But the stock apears to be less risky and, when comparing its historical volatility, eQ Oyj is 1.28 times less risky than Sanoma Oyj. The stock trades about -0.06 of its potential returns per unit of risk. The Sanoma Oyj is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 948.00 in Sanoma Oyj on September 3, 2024 and sell it today you would lose (220.00) from holding Sanoma Oyj or give up 23.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
eQ Oyj vs. Sanoma Oyj
Performance |
| Timeline |
| eQ Oyj |
| Sanoma Oyj |
EQ Oyj and Sanoma Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EQ Oyj and Sanoma Oyj
The main advantage of trading using opposite EQ Oyj and Sanoma Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EQ Oyj position performs unexpectedly, Sanoma 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 Sanoma Oyj will offset losses from the drop in Sanoma Oyj's long position.The idea behind eQ Oyj and Sanoma 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.| Sanoma Oyj vs. Nordea Bank Abp | Sanoma Oyj vs. Detection Technology OY | Sanoma Oyj vs. Remedy Entertainment Oyj | Sanoma Oyj vs. Sotkamo Silver 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |