Correlation Between Sotkamo Silver and HKFoods Oyj

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

By analyzing existing cross correlation between Sotkamo Silver AB and HKFoods Oyj A, you can compare the effects of market volatilities on Sotkamo Silver and HKFoods 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 Sotkamo Silver with a short position of HKFoods Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sotkamo Silver and HKFoods Oyj.

Diversification Opportunities for Sotkamo Silver and HKFoods Oyj

0.51

Correlation Coefficient

Sotkamo Silver  HKFoods Oyj

Very weak diversification

The 3 months correlation between Sotkamo and HKFoods is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sotkamo Silver AB and HKFoods Oyj A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HKFoods Oyj A and Sotkamo Silver 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 Sotkamo Silver AB are associated (or correlated) with HKFoods Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HKFoods Oyj A has no effect on the direction of Sotkamo Silver i.e., Sotkamo Silver and HKFoods Oyj go up and down completely randomly.

Pair Corralation between Sotkamo Silver and HKFoods Oyj

Assuming the 90 days trading horizon Sotkamo Silver is expected to generate 1.46 times less return on investment than HKFoods Oyj. In addition to that, Sotkamo Silver is 1.21 times more volatile than HKFoods Oyj A. It trades about 0.07 of its total potential returns per unit of risk. HKFoods Oyj A is currently generating about 0.13 per unit of volatility. If you would invest  62.00  in HKFoods Oyj A on September 12, 2024 and sell it today you would earn a total of  18.00  from holding HKFoods Oyj A or generate 29.03% return on investment over 90 days.

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

Sotkamo Silver AB  vs.  HKFoods Oyj A

Sotkamo Silver AB

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sotkamo Silver AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Sotkamo Silver demonstrated solid returns over the last few months and may actually be approaching a breakup point.

HKFoods Oyj A

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HKFoods Oyj A are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, HKFoods Oyj unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sotkamo Silver and HKFoods Oyj

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

The idea behind Sotkamo Silver AB and HKFoods Oyj A 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..