Correlation Between Orion Oyj and Telia Company
Can any of the company-specific risk be diversified away by investing in both Orion Oyj and Telia Company 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 Orion Oyj and Telia Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orion Oyj B and Telia Company AB, you can compare the effects of market volatilities on Orion Oyj and Telia Company 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 Orion Oyj with a short position of Telia Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orion Oyj and Telia Company.
Diversification Opportunities for Orion Oyj and Telia Company
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Orion and Telia is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Orion Oyj B and Telia Company AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telia Company and Orion 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 Orion Oyj B are associated (or correlated) with Telia Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telia Company has no effect on the direction of Orion Oyj i.e., Orion Oyj and Telia Company go up and down completely randomly.
Pair Corralation between Orion Oyj and Telia Company
Assuming the 90 days trading horizon Orion Oyj B is expected to generate 0.93 times more return on investment than Telia Company. However, Orion Oyj B is 1.08 times less risky than Telia Company. It trades about 0.06 of its potential returns per unit of risk. Telia Company AB is currently generating about 0.0 per unit of risk. If you would invest 4,460 in Orion Oyj B on August 27, 2024 and sell it today you would earn a total of 63.00 from holding Orion Oyj B or generate 1.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orion Oyj B vs. Telia Company AB
Performance |
| Timeline |
| Orion Oyj B |
| Telia Company |
Orion Oyj and Telia Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orion Oyj and Telia Company
The main advantage of trading using opposite Orion Oyj and Telia Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orion Oyj position performs unexpectedly, Telia Company 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 Telia Company will offset losses from the drop in Telia Company's long position.| Orion Oyj vs. Telia Company AB | Orion Oyj vs. Wartsila Oyj Abp | Orion Oyj vs. Tokmanni Group Oyj | Orion Oyj vs. YIT Oyj |
| Telia Company vs. Nordea Bank Abp | Telia Company vs. Sampo Oyj A | Telia Company vs. Fortum Oyj | Telia Company vs. Wartsila Oyj Abp |
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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