Correlation Between Huhtamaki Oyj and Ponsse Oyj
Can any of the company-specific risk be diversified away by investing in both Huhtamaki Oyj and Ponsse 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 Ponsse 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 Ponsse Oyj 1, you can compare the effects of market volatilities on Huhtamaki Oyj and Ponsse 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 Ponsse Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huhtamaki Oyj and Ponsse Oyj.
Diversification Opportunities for Huhtamaki Oyj and Ponsse Oyj
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Huhtamaki and Ponsse is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Huhtamaki Oyj and Ponsse Oyj 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ponsse Oyj 1 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 Ponsse Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ponsse Oyj 1 has no effect on the direction of Huhtamaki Oyj i.e., Huhtamaki Oyj and Ponsse Oyj go up and down completely randomly.
Pair Corralation between Huhtamaki Oyj and Ponsse Oyj
Assuming the 90 days trading horizon Huhtamaki Oyj is expected to generate 0.72 times more return on investment than Ponsse Oyj. However, Huhtamaki Oyj is 1.38 times less risky than Ponsse Oyj. It trades about 0.04 of its potential returns per unit of risk. Ponsse Oyj 1 is currently generating about -0.05 per unit of risk. If you would invest 2,894 in Huhtamaki Oyj on August 28, 2024 and sell it today you would earn a total of 496.00 from holding Huhtamaki Oyj or generate 17.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huhtamaki Oyj vs. Ponsse Oyj 1
Performance |
| Timeline |
| Huhtamaki Oyj |
| Ponsse Oyj 1 |
Huhtamaki Oyj and Ponsse Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huhtamaki Oyj and Ponsse Oyj
The main advantage of trading using opposite Huhtamaki Oyj and Ponsse Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huhtamaki Oyj position performs unexpectedly, Ponsse 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 Ponsse Oyj will offset losses from the drop in Ponsse Oyj's long position.The idea behind Huhtamaki Oyj and Ponsse Oyj 1 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.| Ponsse Oyj vs. Olvi Oyj A | Ponsse Oyj vs. Valmet Oyj | Ponsse Oyj vs. Wartsila Oyj Abp | Ponsse Oyj vs. UPM Kymmene Oyj |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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