Correlation Between Sampo Oyj and Valmet Oyj
Can any of the company-specific risk be diversified away by investing in both Sampo Oyj and Valmet 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 Valmet 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 Valmet Oyj, you can compare the effects of market volatilities on Sampo Oyj and Valmet 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 Valmet Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sampo Oyj and Valmet Oyj.
Diversification Opportunities for Sampo Oyj and Valmet Oyj
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sampo and Valmet is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sampo Oyj A and Valmet Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valmet 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 Valmet Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valmet Oyj has no effect on the direction of Sampo Oyj i.e., Sampo Oyj and Valmet Oyj go up and down completely randomly.
Pair Corralation between Sampo Oyj and Valmet Oyj
Assuming the 90 days trading horizon Sampo Oyj is expected to generate 1.2 times less return on investment than Valmet Oyj. But when comparing it to its historical volatility, Sampo Oyj A is 1.93 times less risky than Valmet Oyj. It trades about 0.05 of its potential returns per unit of risk. Valmet Oyj is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,970 in Valmet Oyj on August 25, 2024 and sell it today you would earn a total of 205.00 from holding Valmet Oyj or generate 10.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sampo Oyj A vs. Valmet Oyj
Performance |
| Timeline |
| Sampo Oyj A |
| Valmet Oyj |
Sampo Oyj and Valmet Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sampo Oyj and Valmet Oyj
The main advantage of trading using opposite Sampo Oyj and Valmet Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sampo Oyj position performs unexpectedly, Valmet 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 Valmet Oyj will offset losses from the drop in Valmet 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 |
| Valmet Oyj vs. UPM Kymmene Oyj | Valmet Oyj vs. Wartsila Oyj Abp | Valmet Oyj vs. Sampo Oyj A | Valmet Oyj vs. Konecranes Plc |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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