Correlation Between Tokmanni Group and Alma Media

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

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

Diversification Opportunities for Tokmanni Group and Alma Media

-0.41

Correlation Coefficient

Tokmanni Group  Alma Media

Very good diversification

The 3 months correlation between Tokmanni and Alma is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Tokmanni Group Oyj and Alma Media Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alma Media Oyj and Tokmanni Group 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 Tokmanni Group Oyj are associated (or correlated) with Alma Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alma Media Oyj has no effect on the direction of Tokmanni Group i.e., Tokmanni Group and Alma Media go up and down completely randomly.

Pair Corralation between Tokmanni Group and Alma Media

Assuming the 90 days trading horizon Tokmanni Group Oyj is expected to under-perform the Alma Media. In addition to that, Tokmanni Group is 1.18 times more volatile than Alma Media Oyj. It trades about -0.01 of its total potential returns per unit of risk. Alma Media Oyj is currently generating about 0.1 per unit of volatility. If you would invest  955.00  in Alma Media Oyj on February 5, 2024 and sell it today you would earn a total of  25.00  from holding Alma Media Oyj or generate 2.62% return on investment over 90 days.

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

Tokmanni Group Oyj  vs.  Alma Media Oyj

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.

Alma Media Oyj

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alma Media Oyj are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Alma Media is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Tokmanni Group and Alma Media

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

The idea behind Tokmanni Group Oyj and Alma Media 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.