Correlation Between Sampo Oyj and Kemira Oyj
Can any of the company-specific risk be diversified away by investing in both Sampo Oyj and Kemira 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 Sampo Oyj and Kemira Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sampo Oyj A and Kemira Oyj, you can compare the effects of market volatilities on Sampo Oyj and Kemira 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 Sampo Oyj with a short position of Kemira Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sampo Oyj and Kemira Oyj.
Diversification Opportunities for Sampo Oyj and Kemira Oyj
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sampo and Kemira is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Sampo Oyj A and Kemira Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kemira Oyj and Sampo 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 Sampo Oyj A are associated (or correlated) with Kemira Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kemira Oyj has no effect on the direction of Sampo Oyj i.e., Sampo Oyj and Kemira Oyj go up and down completely randomly.
Pair Corralation between Sampo Oyj and Kemira Oyj
Assuming the 90 days trading horizon Sampo Oyj A is expected to generate 0.62 times more return on investment than Kemira Oyj. However, Sampo Oyj A is 1.62 times less risky than Kemira Oyj. It trades about -0.07 of its potential returns per unit of risk. Kemira Oyj is currently generating about -0.22 per unit of risk. If you would invest 4,123 in Sampo Oyj A on August 31, 2024 and sell it today you would lose (53.00) from holding Sampo Oyj A or give up 1.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sampo Oyj A vs. Kemira Oyj
Performance |
| Timeline |
| Sampo Oyj A |
| Kemira Oyj |
Sampo Oyj and Kemira Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sampo Oyj and Kemira Oyj
The main advantage of trading using opposite Sampo Oyj and Kemira Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sampo Oyj position performs unexpectedly, Kemira 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 Kemira Oyj will offset losses from the drop in Kemira Oyj's long position.| Sampo Oyj vs. Nordea Bank Abp | Sampo Oyj vs. Telia Company AB | Sampo Oyj vs. Fortum Oyj | Sampo Oyj vs. SSAB AB ser |
| Kemira Oyj vs. Sampo Oyj A | Kemira Oyj vs. Fortum Oyj | Kemira Oyj vs. Nordea Bank Abp | Kemira Oyj vs. Stora Enso 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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