Correlation Between HK Electric and Oriola Oyj
Can any of the company-specific risk be diversified away by investing in both HK Electric and Oriola 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 HK Electric and Oriola Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HK Electric Investments and Oriola Oyj, you can compare the effects of market volatilities on HK Electric and Oriola 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 HK Electric with a short position of Oriola Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and Oriola Oyj.
Diversification Opportunities for HK Electric and Oriola Oyj
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HKT and Oriola is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and Oriola Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriola Oyj and HK Electric 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 HK Electric Investments are associated (or correlated) with Oriola Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriola Oyj has no effect on the direction of HK Electric i.e., HK Electric and Oriola Oyj go up and down completely randomly.
Pair Corralation between HK Electric and Oriola Oyj
Assuming the 90 days trading horizon HK Electric is expected to generate 176.21 times less return on investment than Oriola Oyj. But when comparing it to its historical volatility, HK Electric Investments is 2.1 times less risky than Oriola Oyj. It trades about 0.0 of its potential returns per unit of risk. Oriola Oyj is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 91.00 in Oriola Oyj on December 8, 2024 and sell it today you would earn a total of 16.00 from holding Oriola Oyj or generate 17.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HK Electric Investments vs. Oriola Oyj
Performance |
| Timeline |
| HK Electric Investments |
| Oriola Oyj |
HK Electric and Oriola Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and Oriola Oyj
The main advantage of trading using opposite HK Electric and Oriola Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, Oriola 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 Oriola Oyj will offset losses from the drop in Oriola Oyj's long position.| HK Electric vs. GERATHERM MEDICAL | ||
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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