Correlation Between Honkarakenne Oyj and Raute Oyj

Can any of the company-specific risk be diversified away by investing in both Honkarakenne Oyj and Raute 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 Honkarakenne Oyj and Raute Oyj 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 Raute Oyj, you can compare the effects of market volatilities on Honkarakenne Oyj and Raute 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 Honkarakenne Oyj with a short position of Raute Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honkarakenne Oyj and Raute Oyj.

Diversification Opportunities for Honkarakenne Oyj and Raute Oyj

0.46

Correlation Coefficient

Honkarakenne Oyj  Raute Oyj

Very weak diversification

The 3 months correlation between Honkarakenne and Raute is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Honkarakenne Oyj B and Raute Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raute 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 Raute Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raute Oyj has no effect on the direction of Honkarakenne Oyj i.e., Honkarakenne Oyj and Raute Oyj go up and down completely randomly.

Pair Corralation between Honkarakenne Oyj and Raute Oyj

Assuming the 90 days trading horizon Honkarakenne Oyj is expected to generate 3.99 times less return on investment than Raute Oyj. In addition to that, Honkarakenne Oyj is 1.64 times more volatile than Raute Oyj. It trades about 0.04 of its total potential returns per unit of risk. Raute Oyj is currently generating about 0.23 per unit of volatility. If you would invest  1,320  in Raute Oyj on December 26, 2024 and sell it today you would earn a total of  325.00  from holding Raute Oyj or generate 24.62% 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.  Raute 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.

Raute Oyj

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Raute Oyj are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Raute Oyj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Honkarakenne Oyj and Raute Oyj

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

The idea behind Honkarakenne Oyj B and Raute 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.