Correlation Between Food Life and Altia Oyj
Can any of the company-specific risk be diversified away by investing in both Food Life and Altia 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 Food Life and Altia Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Food Life Companies and Altia Oyj, you can compare the effects of market volatilities on Food Life and Altia 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 Food Life with a short position of Altia Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Food Life and Altia Oyj.
Diversification Opportunities for Food Life and Altia Oyj
Pay attention - limited upside
The 3 months correlation between Food and Altia is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Food Life Companies and Altia Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altia Oyj and Food Life 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 Food Life Companies are associated (or correlated) with Altia Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altia Oyj has no effect on the direction of Food Life i.e., Food Life and Altia Oyj go up and down completely randomly.
Pair Corralation between Food Life and Altia Oyj
Assuming the 90 days horizon Food Life Companies is expected to generate 1.2 times more return on investment than Altia Oyj. However, Food Life is 1.2 times more volatile than Altia Oyj. It trades about 0.03 of its potential returns per unit of risk. Altia Oyj is currently generating about -0.08 per unit of risk. If you would invest 1,850 in Food Life Companies on September 14, 2024 and sell it today you would earn a total of 350.00 from holding Food Life Companies or generate 18.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Food Life Companies vs. Altia Oyj
Performance |
| Timeline |
| Food Life Companies |
| Altia Oyj |
Food Life and Altia Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Food Life and Altia Oyj
The main advantage of trading using opposite Food Life and Altia Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Food Life position performs unexpectedly, Altia 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 Altia Oyj will offset losses from the drop in Altia Oyj's long position.| Food Life vs. Starbucks | Food Life vs. Superior Plus Corp | Food Life vs. SIVERS SEMICONDUCTORS AB | Food Life vs. NorAm Drilling AS |
| Altia Oyj vs. Food Life Companies | Altia Oyj vs. OURGAME INTHOLDL 00005 | Altia Oyj vs. Associated British Foods | Altia Oyj vs. PT Indofood Sukses |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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