Correlation Between Suominen Oyj and Tokmanni Group

Can any of the company-specific risk be diversified away by investing in both Suominen 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 Suominen 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 Suominen Oyj and Tokmanni Group Oyj, you can compare the effects of market volatilities on Suominen 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 Suominen Oyj with a short position of Tokmanni Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suominen Oyj and Tokmanni Group.

Diversification Opportunities for Suominen Oyj and Tokmanni Group

0.0

Correlation Coefficient

Suominen Oyj  Tokmanni Group

Pay attention - limited upside

The 3 months correlation between Suominen and Tokmanni is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Suominen Oyj 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 Suominen 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 Suominen Oyj 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 Suominen Oyj i.e., Suominen Oyj and Tokmanni Group go up and down completely randomly.

Pair Corralation between Suominen Oyj and Tokmanni Group

If you would invest (100.00) in Suominen Oyj on February 3, 2024 and sell it today you would earn a total of  100.00  from holding Suominen Oyj or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Suominen Oyj  vs.  Tokmanni Group Oyj

Suominen Oyj

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Suominen Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Suominen Oyj is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Tokmanni Group Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tokmanni Group Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Tokmanni Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Suominen Oyj and Tokmanni Group

The main advantage of trading using opposite Suominen Oyj and Tokmanni Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suominen 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.

The idea behind Suominen Oyj and Tokmanni Group Oyj pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.