Correlation Between Orion Oyj and Tokmanni Group
Can any of the company-specific risk be diversified away by investing in both Orion 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 Orion 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 Orion Oyj B and Tokmanni Group Oyj, you can compare the effects of market volatilities on Orion 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 Orion Oyj with a short position of Tokmanni Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orion Oyj and Tokmanni Group.
Diversification Opportunities for Orion Oyj and Tokmanni Group
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Orion and Tokmanni is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Orion Oyj B 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 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 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 Orion Oyj i.e., Orion Oyj and Tokmanni Group go up and down completely randomly.
Pair Corralation between Orion Oyj and Tokmanni Group
Assuming the 90 days trading horizon Orion Oyj B is expected to under-perform the Tokmanni Group. But the stock apears to be less risky and, when comparing its historical volatility, Orion Oyj B is 2.0 times less risky than Tokmanni Group. The stock trades about -0.08 of its potential returns per unit of risk. The Tokmanni Group Oyj is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,028 in Tokmanni Group Oyj on August 25, 2024 and sell it today you would earn a total of 102.00 from holding Tokmanni Group Oyj or generate 9.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Orion Oyj B vs. Tokmanni Group Oyj
Performance |
| Timeline |
| Orion Oyj B |
| Tokmanni Group Oyj |
Orion Oyj and Tokmanni Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orion Oyj and Tokmanni Group
The main advantage of trading using opposite Orion Oyj and Tokmanni Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orion 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.| Orion Oyj vs. Telia Company AB | Orion Oyj vs. Wartsila Oyj Abp | Orion Oyj vs. Tokmanni Group Oyj | Orion Oyj vs. YIT 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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