Correlation Between Fortum Oyj and Tokmanni Group
Can any of the company-specific risk be diversified away by investing in both Fortum Oyj and Tokmanni 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 Fortum Oyj and Tokmanni Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortum Oyj and Tokmanni Group Oyj, you can compare the effects of market volatilities on Fortum Oyj and Tokmanni 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 Fortum Oyj with a short position of Tokmanni Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortum Oyj and Tokmanni Group.
Diversification Opportunities for Fortum Oyj and Tokmanni Group
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fortum and Tokmanni is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Fortum Oyj and Tokmanni Group Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokmanni Group Oyj and Fortum 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 Fortum Oyj are associated (or correlated) with Tokmanni Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokmanni Group Oyj has no effect on the direction of Fortum Oyj i.e., Fortum Oyj and Tokmanni Group go up and down completely randomly.
Pair Corralation between Fortum Oyj and Tokmanni Group
Assuming the 90 days trading horizon Fortum Oyj is expected to generate 4.59 times less return on investment than Tokmanni Group. But when comparing it to its historical volatility, Fortum Oyj is 1.65 times less risky than Tokmanni Group. It trades about 0.03 of its potential returns per unit of risk. Tokmanni Group Oyj is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,083 in Tokmanni Group Oyj on August 28, 2024 and sell it today you would earn a total of 96.00 from holding Tokmanni Group Oyj or generate 8.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortum Oyj vs. Tokmanni Group Oyj
Performance |
| Timeline |
| Fortum Oyj |
| Tokmanni Group Oyj |
Fortum Oyj and Tokmanni Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortum Oyj and Tokmanni Group
The main advantage of trading using opposite Fortum Oyj and Tokmanni Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortum Oyj position performs unexpectedly, Tokmanni 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 Tokmanni Group will offset losses from the drop in Tokmanni Group's long position.| Fortum Oyj vs. HKFoods Oyj A | Fortum Oyj vs. QPR Software Oyj | Fortum Oyj vs. Nordea Bank Abp | Fortum Oyj vs. Sotkamo Silver AB |
| Tokmanni Group vs. Sampo Oyj A | Tokmanni Group vs. Harvia Oyj | Tokmanni Group vs. Nordea Bank Abp | Tokmanni Group vs. Fortum Oyj |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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