Correlation Between Metsa Board and Huhtamaki Oyj
Can any of the company-specific risk be diversified away by investing in both Metsa Board and Huhtamaki 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 Metsa Board and Huhtamaki Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metsa Board Oyj and Huhtamaki Oyj, you can compare the effects of market volatilities on Metsa Board and Huhtamaki 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 Metsa Board with a short position of Huhtamaki Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metsa Board and Huhtamaki Oyj.
Diversification Opportunities for Metsa Board and Huhtamaki Oyj
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Metsa and Huhtamaki is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Metsa Board Oyj and Huhtamaki Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huhtamaki Oyj and Metsa Board 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 Metsa Board Oyj are associated (or correlated) with Huhtamaki Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huhtamaki Oyj has no effect on the direction of Metsa Board i.e., Metsa Board and Huhtamaki Oyj go up and down completely randomly.
Pair Corralation between Metsa Board and Huhtamaki Oyj
Assuming the 90 days trading horizon Metsa Board Oyj is expected to under-perform the Huhtamaki Oyj. In addition to that, Metsa Board is 1.26 times more volatile than Huhtamaki Oyj. It trades about -0.42 of its total potential returns per unit of risk. Huhtamaki Oyj is currently generating about -0.03 per unit of volatility. If you would invest 3,488 in Huhtamaki Oyj on August 30, 2024 and sell it today you would lose (88.00) from holding Huhtamaki Oyj or give up 2.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metsa Board Oyj vs. Huhtamaki Oyj
Performance |
| Timeline |
| Metsa Board Oyj |
| Huhtamaki Oyj |
Metsa Board and Huhtamaki Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metsa Board and Huhtamaki Oyj
The main advantage of trading using opposite Metsa Board and Huhtamaki Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metsa Board position performs unexpectedly, Huhtamaki 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 Huhtamaki Oyj will offset losses from the drop in Huhtamaki Oyj's long position.| Metsa Board vs. UPM Kymmene Oyj | Metsa Board vs. Stora Enso Oyj | Metsa Board vs. Valmet Oyj | Metsa Board vs. Wartsila Oyj Abp |
| Huhtamaki Oyj vs. UPM Kymmene Oyj | Huhtamaki Oyj vs. Stora Enso Oyj | Huhtamaki Oyj vs. Valmet Oyj | Huhtamaki Oyj 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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