Correlation Between Huhtamaki Oyj and Optomed PLC

Can any of the company-specific risk be diversified away by investing in both Huhtamaki Oyj and Optomed PLC 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 Optomed PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Huhtamaki Oyj and Optomed PLC, you can compare the effects of market volatilities on Huhtamaki Oyj and Optomed PLC 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 Optomed PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huhtamaki Oyj and Optomed PLC.

Diversification Opportunities for Huhtamaki Oyj and Optomed PLC

-0.34

Correlation Coefficient

Huhtamaki Oyj  Optomed PLC

Very good diversification

The 3 months correlation between Huhtamaki and Optomed is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Huhtamaki Oyj and Optomed PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optomed PLC 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 Optomed PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optomed PLC has no effect on the direction of Huhtamaki Oyj i.e., Huhtamaki Oyj and Optomed PLC go up and down completely randomly.

Pair Corralation between Huhtamaki Oyj and Optomed PLC

Assuming the 90 days trading horizon Huhtamaki Oyj is expected to generate 0.38 times more return on investment than Optomed PLC. However, Huhtamaki Oyj is 2.66 times less risky than Optomed PLC. It trades about 0.05 of its potential returns per unit of risk. Optomed PLC is currently generating about -0.02 per unit of risk. If you would invest  3,394  in Huhtamaki Oyj on September 14, 2024 and sell it today you would earn a total of  132.00  from holding Huhtamaki Oyj or generate 3.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Huhtamaki Oyj  vs.  Optomed PLC

Huhtamaki Oyj

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Huhtamaki Oyj are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Huhtamaki Oyj is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Optomed PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Optomed PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Optomed PLC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Huhtamaki Oyj and Optomed PLC

The main advantage of trading using opposite Huhtamaki Oyj and Optomed PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huhtamaki Oyj position performs unexpectedly, Optomed PLC 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 Optomed PLC will offset losses from the drop in Optomed PLC's long position.

The idea behind Huhtamaki Oyj and Optomed PLC 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.