Correlation Between Huhtamaki Oyj and Cargotec Oyj
Can any of the company-specific risk be diversified away by investing in both Huhtamaki Oyj and Cargotec 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 Cargotec 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 Cargotec Oyj, you can compare the effects of market volatilities on Huhtamaki Oyj and Cargotec 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 Cargotec Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huhtamaki Oyj and Cargotec Oyj.
Diversification Opportunities for Huhtamaki Oyj and Cargotec Oyj
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Huhtamaki and Cargotec is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Huhtamaki Oyj and Cargotec Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cargotec Oyj 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 Cargotec Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cargotec Oyj has no effect on the direction of Huhtamaki Oyj i.e., Huhtamaki Oyj and Cargotec Oyj go up and down completely randomly.
Pair Corralation between Huhtamaki Oyj and Cargotec Oyj
Assuming the 90 days trading horizon Huhtamaki Oyj is expected to generate 1.52 times less return on investment than Cargotec Oyj. But when comparing it to its historical volatility, Huhtamaki Oyj is 2.1 times less risky than Cargotec Oyj. It trades about 0.04 of its potential returns per unit of risk. Cargotec Oyj is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,772 in Cargotec Oyj on August 28, 2024 and sell it today you would earn a total of 557.00 from holding Cargotec Oyj or generate 11.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huhtamaki Oyj vs. Cargotec Oyj
Performance |
| Timeline |
| Huhtamaki Oyj |
| Cargotec Oyj |
Huhtamaki Oyj and Cargotec Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huhtamaki Oyj and Cargotec Oyj
The main advantage of trading using opposite Huhtamaki Oyj and Cargotec Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huhtamaki Oyj position performs unexpectedly, Cargotec 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 Cargotec Oyj will offset losses from the drop in Cargotec Oyj's long position.The idea behind Huhtamaki Oyj and Cargotec 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.| Cargotec Oyj vs. Aktia Bank Abp | Cargotec Oyj vs. Alandsbanken Abp B | Cargotec Oyj vs. Alandsbanken Abp A | Cargotec Oyj vs. Sampo Oyj A |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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