Correlation Between Elkem ASA and Huddlestock Fintech

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

By analyzing existing cross correlation between Elkem ASA and Huddlestock Fintech As, you can compare the effects of market volatilities on Elkem ASA and Huddlestock Fintech 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 Elkem ASA with a short position of Huddlestock Fintech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elkem ASA and Huddlestock Fintech.

Diversification Opportunities for Elkem ASA and Huddlestock Fintech

0.51

Correlation Coefficient

Elkem ASA  Huddlestock Fintech

Very weak diversification

The 3 months correlation between Elkem and Huddlestock is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Elkem ASA and Huddlestock Fintech As in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huddlestock Fintech and Elkem ASA 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 Elkem ASA are associated (or correlated) with Huddlestock Fintech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huddlestock Fintech has no effect on the direction of Elkem ASA i.e., Elkem ASA and Huddlestock Fintech go up and down completely randomly.

Pair Corralation between Elkem ASA and Huddlestock Fintech

Assuming the 90 days trading horizon Elkem ASA is expected to generate 5.32 times less return on investment than Huddlestock Fintech. But when comparing it to its historical volatility, Elkem ASA is 2.92 times less risky than Huddlestock Fintech. It trades about 0.11 of its potential returns per unit of risk. Huddlestock Fintech As is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  46.00  in Huddlestock Fintech As on December 29, 2024 and sell it today you would earn a total of  79.00  from holding Huddlestock Fintech As or generate 171.74% return on investment over 90 days.

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

Elkem ASA  vs.  Huddlestock Fintech As

Elkem ASA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elkem ASA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Elkem ASA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Huddlestock Fintech

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Huddlestock Fintech As are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Huddlestock Fintech disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Elkem ASA and Huddlestock Fintech

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

The idea behind Elkem ASA and Huddlestock Fintech As 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.