Correlation Between Honkarakenne Oyj and Exel Composites

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

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

Diversification Opportunities for Honkarakenne Oyj and Exel Composites

0.43

Correlation Coefficient

Honkarakenne Oyj  Exel Composites

Very weak diversification

The 3 months correlation between Honkarakenne and Exel is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Honkarakenne Oyj B and Exel Composites Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exel Composites Oyj and Honkarakenne 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 Honkarakenne Oyj B are associated (or correlated) with Exel Composites. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exel Composites Oyj has no effect on the direction of Honkarakenne Oyj i.e., Honkarakenne Oyj and Exel Composites go up and down completely randomly.

Pair Corralation between Honkarakenne Oyj and Exel Composites

Assuming the 90 days trading horizon Honkarakenne Oyj is expected to generate 7.13 times less return on investment than Exel Composites. But when comparing it to its historical volatility, Honkarakenne Oyj B is 1.11 times less risky than Exel Composites. It trades about 0.04 of its potential returns per unit of risk. Exel Composites Oyj is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  28.00  in Exel Composites Oyj on December 25, 2024 and sell it today you would earn a total of  13.00  from holding Exel Composites Oyj or generate 46.43% return on investment over 90 days.

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

Honkarakenne Oyj B  vs.  Exel Composites Oyj

Honkarakenne Oyj B

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Honkarakenne Oyj B are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Honkarakenne Oyj is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

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 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical indicators, Exel Composites demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Honkarakenne Oyj and Exel Composites

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

The idea behind Honkarakenne Oyj B and Exel Composites 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.