Correlation Between Huhtamaki Oyj and Telia Company
Can any of the company-specific risk be diversified away by investing in both Huhtamaki Oyj and Telia Company 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 Telia Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huhtamaki Oyj and Telia Company AB, you can compare the effects of market volatilities on Huhtamaki Oyj and Telia Company 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 Telia Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huhtamaki Oyj and Telia Company.
Diversification Opportunities for Huhtamaki Oyj and Telia Company
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Huhtamaki and Telia is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Huhtamaki Oyj and Telia Company AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telia Company 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 Telia Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telia Company has no effect on the direction of Huhtamaki Oyj i.e., Huhtamaki Oyj and Telia Company go up and down completely randomly.
Pair Corralation between Huhtamaki Oyj and Telia Company
Assuming the 90 days trading horizon Huhtamaki Oyj is expected to generate 1.34 times more return on investment than Telia Company. However, Huhtamaki Oyj is 1.34 times more volatile than Telia Company AB. It trades about -0.03 of its potential returns per unit of risk. Telia Company AB is currently generating about -0.05 per unit of risk. If you would invest 3,488 in Huhtamaki Oyj on August 31, 2024 and sell it today you would lose (86.00) from holding Huhtamaki Oyj or give up 2.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.78% |
| Values | Daily Returns |
Huhtamaki Oyj vs. Telia Company AB
Performance |
| Timeline |
| Huhtamaki Oyj |
| Telia Company |
Huhtamaki Oyj and Telia Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huhtamaki Oyj and Telia Company
The main advantage of trading using opposite Huhtamaki Oyj and Telia Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huhtamaki Oyj position performs unexpectedly, Telia Company 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 Telia Company will offset losses from the drop in Telia Company's long position.| Huhtamaki Oyj vs. UPM Kymmene Oyj | Huhtamaki Oyj vs. Wartsila Oyj Abp | Huhtamaki Oyj vs. Sampo Oyj A | Huhtamaki Oyj vs. Valmet Oyj |
| Telia Company vs. Nordea Bank Abp | Telia Company vs. Sampo Oyj A | Telia Company vs. Fortum Oyj | Telia Company vs. Wartsila Oyj Abp |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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