Correlation Between Huhtamaki Oyj and Kojamo

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

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

Diversification Opportunities for Huhtamaki Oyj and Kojamo

-0.21

Correlation Coefficient

Huhtamaki Oyj  Kojamo

Very good diversification

The 3 months correlation between Huhtamaki and Kojamo is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Huhtamaki Oyj and Kojamo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kojamo and Huhtamaki 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 Huhtamaki Oyj are associated (or correlated) with Kojamo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kojamo has no effect on the direction of Huhtamaki Oyj i.e., Huhtamaki Oyj and Kojamo go up and down completely randomly.

Pair Corralation between Huhtamaki Oyj and Kojamo

Assuming the 90 days trading horizon Huhtamaki Oyj is expected to generate 0.83 times more return on investment than Kojamo. However, Huhtamaki Oyj is 1.2 times less risky than Kojamo. It trades about 0.0 of its potential returns per unit of risk. Kojamo is currently generating about -0.07 per unit of risk. If you would invest  3,426  in Huhtamaki Oyj on October 3, 2024 and sell it today you would lose (8.00) from holding Huhtamaki Oyj or give up 0.23% of portfolio value over 90 days.

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

Huhtamaki Oyj  vs.  Kojamo

Huhtamaki Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Huhtamaki Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Huhtamaki Oyj is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Kojamo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kojamo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's forward-looking indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Huhtamaki Oyj and Kojamo

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

The idea behind Huhtamaki Oyj and Kojamo 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.