Correlation Between HKFoods Oyj and Wulff Yhtiot

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

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

Diversification Opportunities for HKFoods Oyj and Wulff Yhtiot

0.18

Correlation Coefficient

HKFoods Oyj  Wulff Yhtiot

Average diversification

The 3 months correlation between HKFoods and Wulff is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding HKFoods Oyj A and Wulff Yhtiot Oy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wulff Yhtiot Oy and HKFoods Oyj 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 HKFoods Oyj A are associated (or correlated) with Wulff Yhtiot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wulff Yhtiot Oy has no effect on the direction of HKFoods Oyj i.e., HKFoods Oyj and Wulff Yhtiot go up and down completely randomly.

Pair Corralation between HKFoods Oyj and Wulff Yhtiot

Assuming the 90 days trading horizon HKFoods Oyj A is expected to generate 0.96 times more return on investment than Wulff Yhtiot. However, HKFoods Oyj A is 1.04 times less risky than Wulff Yhtiot. It trades about 0.05 of its potential returns per unit of risk. Wulff Yhtiot Oy is currently generating about 0.01 per unit of risk. If you would invest  70.00  in HKFoods Oyj A on October 10, 2024 and sell it today you would earn a total of  14.00  from holding HKFoods Oyj A or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	35.9%
Values	Daily Returns

HKFoods Oyj A  vs.  Wulff Yhtiot Oy

HKFoods Oyj A

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HKFoods Oyj A are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, HKFoods Oyj unveiled solid returns over the last few months and may actually be approaching a breakup point.

Wulff Yhtiot Oy

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wulff Yhtiot Oy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Wulff Yhtiot may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with HKFoods Oyj and Wulff Yhtiot

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

The idea behind HKFoods Oyj A and Wulff Yhtiot Oy 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.