Correlation Between Lassila Tikanoja and Suominen Oyj
Can any of the company-specific risk be diversified away by investing in both Lassila Tikanoja and Suominen 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 Lassila Tikanoja and Suominen Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lassila Tikanoja Oyj and Suominen Oyj, you can compare the effects of market volatilities on Lassila Tikanoja and Suominen 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 Lassila Tikanoja with a short position of Suominen Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lassila Tikanoja and Suominen Oyj.
Diversification Opportunities for Lassila Tikanoja and Suominen Oyj
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lassila and Suominen is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Lassila Tikanoja Oyj and Suominen Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suominen Oyj and Lassila Tikanoja 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 Lassila Tikanoja Oyj are associated (or correlated) with Suominen Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suominen Oyj has no effect on the direction of Lassila Tikanoja i.e., Lassila Tikanoja and Suominen Oyj go up and down completely randomly.
Pair Corralation between Lassila Tikanoja and Suominen Oyj
Assuming the 90 days trading horizon Lassila Tikanoja Oyj is expected to generate 0.49 times more return on investment than Suominen Oyj. However, Lassila Tikanoja Oyj is 2.04 times less risky than Suominen Oyj. It trades about -0.02 of its potential returns per unit of risk. Suominen Oyj is currently generating about -0.02 per unit of risk. If you would invest 940.00 in Lassila Tikanoja Oyj on September 12, 2024 and sell it today you would lose (110.00) from holding Lassila Tikanoja Oyj or give up 11.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lassila Tikanoja Oyj vs. Suominen Oyj
Performance |
| Timeline |
| Lassila Tikanoja Oyj |
| Suominen Oyj |
Lassila Tikanoja and Suominen Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lassila Tikanoja and Suominen Oyj
The main advantage of trading using opposite Lassila Tikanoja and Suominen Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lassila Tikanoja position performs unexpectedly, Suominen 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 Suominen Oyj will offset losses from the drop in Suominen Oyj's long position.| Lassila Tikanoja vs. Telefonaktiebolaget LM Ericsson | Lassila Tikanoja vs. KONE Oyj | Lassila Tikanoja vs. Nordea Bank Abp | Lassila Tikanoja vs. TietoEVRY Corp |
| Suominen Oyj vs. Tokmanni Group Oyj | Suominen Oyj vs. Kemira Oyj | Suominen Oyj vs. Telia Company AB | Suominen Oyj vs. Outokumpu 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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