Correlation Between Raute Oyj and Honkarakenne Oyj

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

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

Diversification Opportunities for Raute Oyj and Honkarakenne Oyj

-0.48

Correlation Coefficient

Raute Oyj  Honkarakenne Oyj

Very good diversification

The 3 months correlation between Raute and Honkarakenne is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Raute Oyj and Honkarakenne Oyj B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honkarakenne Oyj B and Raute 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 Raute Oyj are associated (or correlated) with Honkarakenne Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honkarakenne Oyj B has no effect on the direction of Raute Oyj i.e., Raute Oyj and Honkarakenne Oyj go up and down completely randomly.

Pair Corralation between Raute Oyj and Honkarakenne Oyj

Assuming the 90 days trading horizon Raute Oyj is expected to generate 1.2 times less return on investment than Honkarakenne Oyj. But when comparing it to its historical volatility, Raute Oyj is 1.91 times less risky than Honkarakenne Oyj. It trades about 0.21 of its potential returns per unit of risk. Honkarakenne Oyj B is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  243.00  in Honkarakenne Oyj B on October 24, 2024 and sell it today you would earn a total of  13.00  from holding Honkarakenne Oyj B or generate 5.35% return on investment over 90 days.

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

Raute Oyj  vs.  Honkarakenne Oyj B

Raute Oyj

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Raute Oyj are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Raute Oyj is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Honkarakenne Oyj B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Honkarakenne Oyj B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Raute Oyj and Honkarakenne Oyj

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

The idea behind Raute Oyj and Honkarakenne Oyj B 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.