Correlation Between Tokmanni Group and YIT Oyj

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

Diversification Opportunities for Tokmanni Group and YIT Oyj

-0.71

Correlation Coefficient

Tokmanni Group  YIT Oyj

Pay attention - limited upside

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

Pair Corralation between Tokmanni Group and YIT Oyj

Assuming the 90 days trading horizon Tokmanni Group Oyj is expected to generate 0.9 times more return on investment than YIT Oyj. However, Tokmanni Group Oyj is 1.11 times less risky than YIT Oyj. It trades about 0.04 of its potential returns per unit of risk. YIT Oyj is currently generating about -0.04 per unit of risk. If you would invest  1,117  in Tokmanni Group Oyj on February 14, 2024 and sell it today you would earn a total of  369.00  from holding Tokmanni Group Oyj or generate 33.03% return on investment over 90 days.

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

Tokmanni Group Oyj  vs.  YIT 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 recent stock price disturbance, may contribute to short-term losses for the investors.

YIT Oyj

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in YIT Oyj are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, YIT Oyj exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tokmanni Group and YIT Oyj

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

The idea behind Tokmanni Group Oyj and YIT 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.

Check out your portfolio center.

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.