Correlation Between Exel Composites and Viking Line

Can any of the company-specific risk be diversified away by investing in both Exel Composites and Viking Line 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 Exel Composites and Viking Line into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Exel Composites Oyj and Viking Line Abp, you can compare the effects of market volatilities on Exel Composites and Viking Line 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 Exel Composites with a short position of Viking Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exel Composites and Viking Line.

Diversification Opportunities for Exel Composites and Viking Line

-0.69

Correlation Coefficient

Exel Composites  Viking Line

Excellent diversification

The 3 months correlation between Exel and Viking is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Exel Composites Oyj and Viking Line Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viking Line Abp and Exel Composites 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 Exel Composites Oyj are associated (or correlated) with Viking Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viking Line Abp has no effect on the direction of Exel Composites i.e., Exel Composites and Viking Line go up and down completely randomly.

Pair Corralation between Exel Composites and Viking Line

Assuming the 90 days trading horizon Exel Composites Oyj is expected to under-perform the Viking Line. In addition to that, Exel Composites is 2.19 times more volatile than Viking Line Abp. It trades about -0.23 of its total potential returns per unit of risk. Viking Line Abp is currently generating about 0.22 per unit of volatility. If you would invest  2,057  in Viking Line Abp on February 6, 2024 and sell it today you would earn a total of  193.00  from holding Viking Line Abp or generate 9.38% return on investment over 90 days.

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

Exel Composites Oyj  vs.  Viking Line Abp

Exel Composites Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exel Composites Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Viking Line Abp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Viking Line Abp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Viking Line demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Exel Composites and Viking Line

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

The idea behind Exel Composites Oyj and Viking Line Abp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.