Correlation Between Sampo Oyj and Assicurazioni Generali

Can any of the company-specific risk be diversified away by investing in both Sampo Oyj and Assicurazioni Generali 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 Assicurazioni Generali into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sampo Oyj and Assicurazioni Generali SpA, you can compare the effects of market volatilities on Sampo Oyj and Assicurazioni Generali 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 Assicurazioni Generali. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sampo Oyj and Assicurazioni Generali.

Diversification Opportunities for Sampo Oyj and Assicurazioni Generali

0.36

Correlation Coefficient

Sampo Oyj  Assicurazioni Generali

Weak diversification

The 3 months correlation between Sampo and Assicurazioni is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sampo Oyj and Assicurazioni Generali SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assicurazioni Generali 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 are associated (or correlated) with Assicurazioni Generali. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assicurazioni Generali has no effect on the direction of Sampo Oyj i.e., Sampo Oyj and Assicurazioni Generali go up and down completely randomly.

Pair Corralation between Sampo Oyj and Assicurazioni Generali

Assuming the 90 days horizon Sampo Oyj is expected to under-perform the Assicurazioni Generali. In addition to that, Sampo Oyj is 1.19 times more volatile than Assicurazioni Generali SpA. It trades about -0.11 of its total potential returns per unit of risk. Assicurazioni Generali SpA is currently generating about 0.17 per unit of volatility. If you would invest  1,123  in Assicurazioni Generali SpA on January 17, 2024 and sell it today you would earn a total of  75.00  from holding Assicurazioni Generali SpA or generate 6.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sampo Oyj  vs.  Assicurazioni Generali SpA

Sampo Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sampo Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sampo Oyj is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Assicurazioni Generali

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Assicurazioni Generali SpA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Assicurazioni Generali may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Sampo Oyj and Assicurazioni Generali

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

The idea behind Sampo Oyj and Assicurazioni Generali SpA 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 Transaction History module to view history of all your transactions and understand their impact on performance.