Correlation Between Orion Oyj and Huhtamaki Oyj
Can any of the company-specific risk be diversified away by investing in both Orion Oyj 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 Orion Oyj and Huhtamaki Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orion Oyj A and Huhtamaki Oyj, you can compare the effects of market volatilities on Orion Oyj 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 Orion Oyj with a short position of Huhtamaki Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orion Oyj and Huhtamaki Oyj.
Diversification Opportunities for Orion Oyj and Huhtamaki Oyj
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Orion and Huhtamaki is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Orion Oyj A and Huhtamaki Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huhtamaki Oyj and Orion 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 Orion Oyj A 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 Orion Oyj i.e., Orion Oyj and Huhtamaki Oyj go up and down completely randomly.
Pair Corralation between Orion Oyj and Huhtamaki Oyj
Assuming the 90 days trading horizon Orion Oyj A is expected to generate 0.87 times more return on investment than Huhtamaki Oyj. However, Orion Oyj A is 1.14 times less risky than Huhtamaki Oyj. It trades about 0.03 of its potential returns per unit of risk. Huhtamaki Oyj is currently generating about -0.2 per unit of risk. If you would invest 4,460 in Orion Oyj A on August 31, 2024 and sell it today you would earn a total of 25.00 from holding Orion Oyj A or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orion Oyj A vs. Huhtamaki Oyj
Performance |
| Timeline |
| Orion Oyj A |
| Huhtamaki Oyj |
Orion Oyj and Huhtamaki Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orion Oyj and Huhtamaki Oyj
The main advantage of trading using opposite Orion Oyj and Huhtamaki Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orion Oyj 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.The idea behind Orion Oyj A and Huhtamaki 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.| Huhtamaki Oyj vs. UPM Kymmene Oyj | Huhtamaki Oyj vs. Wartsila Oyj Abp | Huhtamaki Oyj vs. Sampo Oyj A | Huhtamaki Oyj vs. Valmet 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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