Correlation Between OMX Helsinki and Glaston Oyj

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Can any of the company-specific risk be diversified away by investing in both OMX Helsinki and Glaston 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 OMX Helsinki and Glaston Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between OMX Helsinki 25 and Glaston Oyj Abp, you can compare the effects of market volatilities on OMX Helsinki and Glaston 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 OMX Helsinki with a short position of Glaston Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of OMX Helsinki and Glaston Oyj.

Diversification Opportunities for OMX Helsinki and Glaston Oyj

0.64

Correlation Coefficient

OMX Helsinki

Glaston Oyj

Poor diversification

The 3 months correlation between OMX and Glaston is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding OMX Helsinki 25 and Glaston Oyj Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glaston Oyj Abp and OMX Helsinki 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 OMX Helsinki 25 are associated (or correlated) with Glaston Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glaston Oyj Abp has no effect on the direction of OMX Helsinki i.e., OMX Helsinki and Glaston Oyj go up and down completely randomly.

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Pair Corralation between OMX Helsinki and Glaston Oyj

Assuming the 90 days trading horizon OMX Helsinki is expected to generate 174.0 times less return on investment than Glaston Oyj. But when comparing it to its historical volatility, OMX Helsinki 25 is 2.07 times less risky than Glaston Oyj. It trades about 0.0 of its potential returns per unit of risk. Glaston Oyj Abp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 69.00 in Glaston Oyj Abp on August 26, 2024 and sell it today you would earn a total of 7.00 from holding Glaston Oyj Abp or generate 10.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

OMX Helsinki 25 vs. Glaston Oyj Abp

Performance

Timeline

OMX Helsinki and Glaston Oyj Volatility Contrast

Predicted Return Density

Returns

OMX Helsinki 25

Pair trading matchups for OMX Helsinki

	OMX Helsinki vs. HKFoods Oyj A
	OMX Helsinki vs. SSH Communications Security
	OMX Helsinki vs. Alandsbanken Abp A
	OMX Helsinki vs. Reka Industrial Oyj

Glaston Oyj Abp

Pair trading matchups for Glaston Oyj

	Glaston Oyj vs. Aktia Bank Abp
	Glaston Oyj vs. Alandsbanken Abp B
	Glaston Oyj vs. Alandsbanken Abp A
	Glaston Oyj vs. Sampo Oyj A

Pair Trading with OMX Helsinki and Glaston Oyj

The main advantage of trading using opposite OMX Helsinki and Glaston Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OMX Helsinki position performs unexpectedly, Glaston 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 Glaston Oyj will offset losses from the drop in Glaston Oyj's long position.

	OMX Helsinki vs. HKFoods Oyj A
	OMX Helsinki vs. SSH Communications Security
	OMX Helsinki vs. Alandsbanken Abp A
	OMX Helsinki vs. Reka Industrial Oyj

The idea behind OMX Helsinki 25 and Glaston Oyj Abp 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.

	Glaston Oyj vs. Aktia Bank Abp
	Glaston Oyj vs. Alandsbanken Abp B
	Glaston Oyj vs. Alandsbanken Abp A
	Glaston Oyj vs. Sampo Oyj A

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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