Correlation Between Trainers House and Exel Composites
Can any of the company-specific risk be diversified away by investing in both Trainers House and Exel Composites 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 Trainers House and Exel Composites into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trainers House Oyj and Exel Composites Oyj, you can compare the effects of market volatilities on Trainers House and Exel Composites 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 Trainers House with a short position of Exel Composites. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trainers House and Exel Composites.
Diversification Opportunities for Trainers House and Exel Composites
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Trainers and Exel is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Trainers House Oyj and Exel Composites Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exel Composites Oyj and Trainers House 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 Trainers House Oyj are associated (or correlated) with Exel Composites. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exel Composites Oyj has no effect on the direction of Trainers House i.e., Trainers House and Exel Composites go up and down completely randomly.
Pair Corralation between Trainers House and Exel Composites
Assuming the 90 days trading horizon Trainers House Oyj is expected to generate 0.64 times more return on investment than Exel Composites. However, Trainers House Oyj is 1.57 times less risky than Exel Composites. It trades about -0.07 of its potential returns per unit of risk. Exel Composites Oyj is currently generating about -0.1 per unit of risk. If you would invest 474.00 in Trainers House Oyj on August 24, 2024 and sell it today you would lose (265.00) from holding Trainers House Oyj or give up 55.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trainers House Oyj vs. Exel Composites Oyj
Performance |
| Timeline |
| Trainers House Oyj |
| Exel Composites Oyj |
Trainers House and Exel Composites Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trainers House and Exel Composites
The main advantage of trading using opposite Trainers House and Exel Composites positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trainers House position performs unexpectedly, Exel Composites 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 Exel Composites will offset losses from the drop in Exel Composites' long position.| Trainers House vs. Aktia Bank Abp | Trainers House vs. Alandsbanken Abp B | Trainers House vs. Alandsbanken Abp A | Trainers House vs. Sampo Oyj A |
| Exel Composites vs. Trainers House Oyj | Exel Composites vs. Alma Media Oyj | Exel Composites vs. Nordea Bank Abp | Exel Composites vs. Detection Technology 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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