Correlation Between Terveystalo and Atria Oyj

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

By analyzing existing cross correlation between Terveystalo Oy and Atria Oyj A, you can compare the effects of market volatilities on Terveystalo and Atria 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 Terveystalo with a short position of Atria Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Terveystalo and Atria Oyj.

Diversification Opportunities for Terveystalo and Atria Oyj

0.62

Correlation Coefficient

Terveystalo  Atria Oyj

Poor diversification

The 3 months correlation between Terveystalo and Atria is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Terveystalo Oy and Atria Oyj A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atria Oyj A and Terveystalo 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 Terveystalo Oy are associated (or correlated) with Atria Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atria Oyj A has no effect on the direction of Terveystalo i.e., Terveystalo and Atria Oyj go up and down completely randomly.

Pair Corralation between Terveystalo and Atria Oyj

Assuming the 90 days trading horizon Terveystalo Oy is expected to generate 1.52 times more return on investment than Atria Oyj. However, Terveystalo is 1.52 times more volatile than Atria Oyj A. It trades about 0.29 of its potential returns per unit of risk. Atria Oyj A is currently generating about 0.02 per unit of risk. If you would invest  752.00  in Terveystalo Oy on January 30, 2024 and sell it today you would earn a total of  100.00  from holding Terveystalo Oy or generate 13.3% return on investment over 90 days.

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

Terveystalo Oy  vs.  Atria Oyj A

Terveystalo Oy

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Terveystalo Oy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Terveystalo may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Atria Oyj A

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Terveystalo and Atria Oyj

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

The idea behind Terveystalo Oy and Atria Oyj A 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.