Correlation Between Huhtamaki Oyj and Tulikivi Oyj

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

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

Diversification Opportunities for Huhtamaki Oyj and Tulikivi Oyj

-0.53

Correlation Coefficient

Huhtamaki Oyj  Tulikivi Oyj

Excellent diversification

The 3 months correlation between Huhtamaki and Tulikivi is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Huhtamaki Oyj and Tulikivi Oyj A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tulikivi Oyj A 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 Tulikivi Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tulikivi Oyj A has no effect on the direction of Huhtamaki Oyj i.e., Huhtamaki Oyj and Tulikivi Oyj go up and down completely randomly.

Pair Corralation between Huhtamaki Oyj and Tulikivi Oyj

Assuming the 90 days trading horizon Huhtamaki Oyj is expected to generate 1.36 times less return on investment than Tulikivi Oyj. But when comparing it to its historical volatility, Huhtamaki Oyj is 1.8 times less risky than Tulikivi Oyj. It trades about 0.02 of its potential returns per unit of risk. Tulikivi Oyj A is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  45.00  in Tulikivi Oyj A on January 31, 2024 and sell it today you would earn a total of  2.00  from holding Tulikivi Oyj A or generate 4.44% return on investment over 90 days.

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

Huhtamaki Oyj  vs.  Tulikivi Oyj A

Huhtamaki Oyj

Risk-Adjusted Performance

1 of 100

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.

Tulikivi Oyj A

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tulikivi Oyj A are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Tulikivi Oyj is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Huhtamaki Oyj and Tulikivi Oyj

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

The idea behind Huhtamaki Oyj and Tulikivi 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.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.