Correlation Between Exel Composites and Huhtamaki Oyj

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Can any of the company-specific risk be diversified away by investing in both Exel Composites and Huhtamaki 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 Exel Composites and Huhtamaki Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exel Composites Oyj and Huhtamaki Oyj, you can compare the effects of market volatilities on Exel Composites and Huhtamaki 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 Exel Composites with a short position of Huhtamaki Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exel Composites and Huhtamaki Oyj.

Diversification Opportunities for Exel Composites and Huhtamaki Oyj

-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between Exel and Huhtamaki is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Exel Composites Oyj and Huhtamaki Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huhtamaki Oyj and Exel Composites 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 Exel Composites Oyj are associated (or correlated) with Huhtamaki Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huhtamaki Oyj has no effect on the direction of Exel Composites i.e., Exel Composites and Huhtamaki Oyj go up and down completely randomly.

Pair Corralation between Exel Composites and Huhtamaki Oyj

Assuming the 90 days trading horizon Exel Composites Oyj is expected to under-perform the Huhtamaki Oyj. In addition to that, Exel Composites is 1.28 times more volatile than Huhtamaki Oyj. It trades about -0.12 of its total potential returns per unit of risk. Huhtamaki Oyj is currently generating about 0.02 per unit of volatility. If you would invest  3,405  in Huhtamaki Oyj on January 31, 2024 and sell it today you would earn a total of  215.00  from holding Huhtamaki Oyj or generate 6.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Exel Composites Oyj  vs.  Huhtamaki Oyj

 Performance 
       Timeline  
Exel Composites Oyj 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Exel Composites Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
Huhtamaki Oyj 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Huhtamaki Oyj are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Huhtamaki Oyj is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Exel Composites and Huhtamaki Oyj Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Exel Composites and Huhtamaki Oyj

The main advantage of trading using opposite Exel Composites and Huhtamaki Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exel Composites position performs unexpectedly, Huhtamaki 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 Huhtamaki Oyj will offset losses from the drop in Huhtamaki Oyj's long position.
The idea behind Exel Composites Oyj and Huhtamaki 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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