Correlation Between Exel Composites and Boreo Oyj

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

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

Diversification Opportunities for Exel Composites and Boreo Oyj

0.8

Correlation Coefficient

Exel Composites  Boreo Oyj

Very poor diversification

The 3 months correlation between Exel and Boreo is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Exel Composites Oyj and Boreo Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boreo Oyj and Exel Composites 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 Exel Composites Oyj are associated (or correlated) with Boreo Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boreo Oyj has no effect on the direction of Exel Composites i.e., Exel Composites and Boreo Oyj go up and down completely randomly.

Pair Corralation between Exel Composites and Boreo Oyj

Assuming the 90 days trading horizon Exel Composites Oyj is expected to generate 0.75 times more return on investment than Boreo Oyj. However, Exel Composites Oyj is 1.34 times less risky than Boreo Oyj. It trades about 0.21 of its potential returns per unit of risk. Boreo Oyj is currently generating about 0.11 per unit of risk. If you would invest  28.00  in Exel Composites Oyj on December 30, 2024 and sell it today you would earn a total of  12.00  from holding Exel Composites Oyj or generate 42.86% return on investment over 90 days.

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

Exel Composites Oyj  vs.  Boreo Oyj

Exel Composites Oyj

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Exel Composites Oyj are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Exel Composites demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Boreo Oyj

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boreo Oyj are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Boreo Oyj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Exel Composites and Boreo Oyj

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

The idea behind Exel Composites Oyj and Boreo 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .