Correlation Between Sampo Oyj and Outokumpu Oyj
Can any of the company-specific risk be diversified away by investing in both Sampo Oyj and Outokumpu 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 Outokumpu 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 Outokumpu Oyj, you can compare the effects of market volatilities on Sampo Oyj and Outokumpu 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 Outokumpu Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sampo Oyj and Outokumpu Oyj.
Diversification Opportunities for Sampo Oyj and Outokumpu Oyj
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sampo and Outokumpu is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sampo Oyj A and Outokumpu Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outokumpu 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 Outokumpu Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outokumpu Oyj has no effect on the direction of Sampo Oyj i.e., Sampo Oyj and Outokumpu Oyj go up and down completely randomly.
Pair Corralation between Sampo Oyj and Outokumpu Oyj
Assuming the 90 days trading horizon Sampo Oyj A is expected to generate 0.62 times more return on investment than Outokumpu Oyj. However, Sampo Oyj A is 1.62 times less risky than Outokumpu Oyj. It trades about 0.03 of its potential returns per unit of risk. Outokumpu Oyj is currently generating about -0.03 per unit of risk. If you would invest 3,702 in Sampo Oyj A on November 3, 2024 and sell it today you would earn a total of 276.00 from holding Sampo Oyj A or generate 7.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sampo Oyj A vs. Outokumpu Oyj
Performance |
| Timeline |
| Sampo Oyj A |
| Outokumpu Oyj |
Sampo Oyj and Outokumpu Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sampo Oyj and Outokumpu Oyj
The main advantage of trading using opposite Sampo Oyj and Outokumpu Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sampo Oyj position performs unexpectedly, Outokumpu 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 Outokumpu Oyj will offset losses from the drop in Outokumpu Oyj's long position.| Sampo Oyj vs. Nordea Bank Abp | Sampo Oyj vs. Fortum Oyj | Sampo Oyj vs. UPM Kymmene Oyj | Sampo Oyj vs. Neste Oil Oyj |
| Outokumpu Oyj vs. Nordea Bank Abp | Outokumpu Oyj vs. Fortum Oyj | Outokumpu Oyj vs. Wartsila Oyj Abp | Outokumpu Oyj vs. Sampo Oyj A |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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