Correlation Between Honkarakenne Oyj and Bittium Oyj

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

Diversification Opportunities for Honkarakenne Oyj and Bittium Oyj

0.31
  Correlation Coefficient

Weak diversification

The 3 months correlation between Honkarakenne and Bittium is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Honkarakenne Oyj B and Bittium Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bittium Oyj and Honkarakenne 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 Honkarakenne Oyj B are associated (or correlated) with Bittium Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bittium Oyj has no effect on the direction of Honkarakenne Oyj i.e., Honkarakenne Oyj and Bittium Oyj go up and down completely randomly.

Pair Corralation between Honkarakenne Oyj and Bittium Oyj

Assuming the 90 days trading horizon Honkarakenne Oyj B is expected to generate 1.18 times more return on investment than Bittium Oyj. However, Honkarakenne Oyj is 1.18 times more volatile than Bittium Oyj. It trades about 0.14 of its potential returns per unit of risk. Bittium Oyj is currently generating about -0.07 per unit of risk. If you would invest  250.00  in Honkarakenne Oyj B on October 21, 2024 and sell it today you would earn a total of  14.00  from holding Honkarakenne Oyj B or generate 5.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Honkarakenne Oyj B  vs.  Bittium Oyj

 Performance 
       Timeline  
Honkarakenne Oyj B 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Honkarakenne Oyj B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.
Bittium Oyj 

Risk-Adjusted Performance

0 of 100

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

Honkarakenne Oyj and Bittium Oyj Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Honkarakenne Oyj and Bittium Oyj

The main advantage of trading using opposite Honkarakenne Oyj and Bittium Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honkarakenne Oyj position performs unexpectedly, Bittium 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 Bittium Oyj will offset losses from the drop in Bittium Oyj's long position.
The idea behind Honkarakenne Oyj B and Bittium 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.
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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