Correlation Between Kesla Oyj and Honkarakenne Oyj
Can any of the company-specific risk be diversified away by investing in both Kesla Oyj and Honkarakenne 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 Kesla Oyj and Honkarakenne Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kesla Oyj A and Honkarakenne Oyj B, you can compare the effects of market volatilities on Kesla Oyj and Honkarakenne 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 Kesla Oyj with a short position of Honkarakenne Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kesla Oyj and Honkarakenne Oyj.
Diversification Opportunities for Kesla Oyj and Honkarakenne Oyj
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kesla and Honkarakenne is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Kesla Oyj A and Honkarakenne Oyj B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honkarakenne Oyj B and Kesla 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 Kesla Oyj A are associated (or correlated) with Honkarakenne Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honkarakenne Oyj B has no effect on the direction of Kesla Oyj i.e., Kesla Oyj and Honkarakenne Oyj go up and down completely randomly.
Pair Corralation between Kesla Oyj and Honkarakenne Oyj
Assuming the 90 days trading horizon Kesla Oyj A is expected to generate 1.04 times more return on investment than Honkarakenne Oyj. However, Kesla Oyj is 1.04 times more volatile than Honkarakenne Oyj B. It trades about -0.01 of its potential returns per unit of risk. Honkarakenne Oyj B is currently generating about -0.03 per unit of risk. If you would invest 438.00 in Kesla Oyj A on August 30, 2024 and sell it today you would lose (88.00) from holding Kesla Oyj A or give up 20.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Kesla Oyj A vs. Honkarakenne Oyj B
Performance |
| Timeline |
| Kesla Oyj A |
| Honkarakenne Oyj B |
Kesla Oyj and Honkarakenne Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kesla Oyj and Honkarakenne Oyj
The main advantage of trading using opposite Kesla Oyj and Honkarakenne Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kesla Oyj position performs unexpectedly, Honkarakenne 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 Honkarakenne Oyj will offset losses from the drop in Honkarakenne Oyj's long position.| Kesla Oyj vs. Telefonaktiebolaget LM Ericsson | Kesla Oyj vs. SSAB AB ser | Kesla Oyj vs. SSAB AB ser | Kesla Oyj vs. Telia Company AB |
| Honkarakenne Oyj vs. Tokmanni Group Oyj | Honkarakenne Oyj vs. Harvia Oyj | Honkarakenne Oyj vs. CapMan Oyj B | Honkarakenne Oyj vs. Kamux Suomi Oy |
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 Stocks Directory module to find actively traded stocks across global markets.
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