Correlation Between Healthier Choices and Kesko Oyj

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

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

Diversification Opportunities for Healthier Choices and Kesko Oyj

0.24

Correlation Coefficient

Healthier Choices  Kesko Oyj

Modest diversification

The 3 months correlation between Healthier and Kesko is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Healthier Choices Management and Kesko Oyj ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kesko Oyj ADR and Healthier Choices 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 Healthier Choices Management are associated (or correlated) with Kesko Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kesko Oyj ADR has no effect on the direction of Healthier Choices i.e., Healthier Choices and Kesko Oyj go up and down completely randomly.

Pair Corralation between Healthier Choices and Kesko Oyj

Given the investment horizon of 90 days Healthier Choices Management is expected to generate 249.88 times more return on investment than Kesko Oyj. However, Healthier Choices is 249.88 times more volatile than Kesko Oyj ADR. It trades about 0.34 of its potential returns per unit of risk. Kesko Oyj ADR is currently generating about 0.11 per unit of risk. If you would invest  0.00  in Healthier Choices Management on December 30, 2024 and sell it today you would earn a total of  0.00  from holding Healthier Choices Management or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Healthier Choices Management  vs.  Kesko Oyj ADR

Healthier Choices

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Healthier Choices Management are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent primary indicators, Healthier Choices exhibited solid returns over the last few months and may actually be approaching a breakup point.

Kesko Oyj ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kesko Oyj ADR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Kesko Oyj may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Healthier Choices and Kesko Oyj

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

The idea behind Healthier Choices Management and Kesko Oyj ADR 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.