Correlation Between Titanium Oyj and HKFoods Oyj

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

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

Diversification Opportunities for Titanium Oyj and HKFoods Oyj

-0.05

Correlation Coefficient

Titanium Oyj  HKFoods Oyj

Good diversification

The 3 months correlation between Titanium and HKFoods is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Titanium Oyj and HKFoods Oyj A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HKFoods Oyj A and Titanium 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 Titanium Oyj are associated (or correlated) with HKFoods Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HKFoods Oyj A has no effect on the direction of Titanium Oyj i.e., Titanium Oyj and HKFoods Oyj go up and down completely randomly.

Pair Corralation between Titanium Oyj and HKFoods Oyj

Assuming the 90 days trading horizon Titanium Oyj is expected to under-perform the HKFoods Oyj. But the stock apears to be less risky and, when comparing its historical volatility, Titanium Oyj is 1.75 times less risky than HKFoods Oyj. The stock trades about -0.35 of its potential returns per unit of risk. The HKFoods Oyj A is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  85.00  in HKFoods Oyj A on October 5, 2024 and sell it today you would lose (4.00) from holding HKFoods Oyj A or give up 4.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.12%
Values	Daily Returns

Titanium Oyj  vs.  HKFoods Oyj A

Titanium Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

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

HKFoods Oyj A

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HKFoods Oyj A are ranked lower than 8 (%) 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.

Pair Trading with Titanium Oyj and HKFoods Oyj

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

The idea behind Titanium Oyj and HKFoods Oyj A 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.