Correlation Between Sampo Oyj and TietoEVRY Corp

Can any of the company-specific risk be diversified away by investing in both Sampo Oyj and TietoEVRY Corp 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 TietoEVRY Corp 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 TietoEVRY Corp, you can compare the effects of market volatilities on Sampo Oyj and TietoEVRY Corp 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 TietoEVRY Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sampo Oyj and TietoEVRY Corp.

Diversification Opportunities for Sampo Oyj and TietoEVRY Corp

0.71

Correlation Coefficient

Sampo Oyj  TietoEVRY Corp

Poor diversification

The 3 months correlation between Sampo and TietoEVRY is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sampo Oyj A and TietoEVRY Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TietoEVRY Corp 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 TietoEVRY Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TietoEVRY Corp has no effect on the direction of Sampo Oyj i.e., Sampo Oyj and TietoEVRY Corp go up and down completely randomly.

Pair Corralation between Sampo Oyj and TietoEVRY Corp

Assuming the 90 days trading horizon Sampo Oyj is expected to generate 4.76 times less return on investment than TietoEVRY Corp. But when comparing it to its historical volatility, Sampo Oyj A is 2.98 times less risky than TietoEVRY Corp. It trades about 0.05 of its potential returns per unit of risk. TietoEVRY Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,981  in TietoEVRY Corp on March 18, 2024 and sell it today you would earn a total of  281.00  from holding TietoEVRY Corp or generate 14.18% 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.  TietoEVRY Corp

Sampo Oyj A

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sampo Oyj A are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Sampo Oyj is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

TietoEVRY Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TietoEVRY Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, TietoEVRY Corp demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sampo Oyj and TietoEVRY Corp

The main advantage of trading using opposite Sampo Oyj and TietoEVRY Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sampo Oyj position performs unexpectedly, TietoEVRY Corp 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 TietoEVRY Corp will offset losses from the drop in TietoEVRY Corp's long position.

The idea behind Sampo Oyj A and TietoEVRY Corp 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.