Correlation Between Fortum Oyj and Neoen SA
Can any of the company-specific risk be diversified away by investing in both Fortum Oyj and Neoen SA 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 Fortum Oyj and Neoen SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortum Oyj and Neoen SA, you can compare the effects of market volatilities on Fortum Oyj and Neoen SA 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 Fortum Oyj with a short position of Neoen SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortum Oyj and Neoen SA.
Diversification Opportunities for Fortum Oyj and Neoen SA
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fortum and Neoen is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Fortum Oyj and Neoen SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neoen SA and Fortum 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 Fortum Oyj are associated (or correlated) with Neoen SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neoen SA has no effect on the direction of Fortum Oyj i.e., Fortum Oyj and Neoen SA go up and down completely randomly.
Pair Corralation between Fortum Oyj and Neoen SA
Assuming the 90 days horizon Fortum Oyj is expected to under-perform the Neoen SA. In addition to that, Fortum Oyj is 6.08 times more volatile than Neoen SA. It trades about -0.05 of its total potential returns per unit of risk. Neoen SA is currently generating about -0.12 per unit of volatility. If you would invest 3,974 in Neoen SA on November 2, 2024 and sell it today you would lose (26.00) from holding Neoen SA or give up 0.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Fortum Oyj vs. Neoen SA
Performance |
| Timeline |
| Fortum Oyj |
| Neoen SA |
Fortum Oyj and Neoen SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortum Oyj and Neoen SA
The main advantage of trading using opposite Fortum Oyj and Neoen SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortum Oyj position performs unexpectedly, Neoen SA 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 Neoen SA will offset losses from the drop in Neoen SA's long position.| Fortum Oyj vs. Ormat Technologies | Fortum Oyj vs. Neoen SA | Fortum Oyj vs. Encavis AG | Fortum Oyj vs. TOHOKU EL PWR |
| Neoen SA vs. Ormat Technologies | Neoen SA vs. Encavis AG | Neoen SA vs. TOHOKU EL PWR | Neoen SA vs. BEIJJINGNENG CLERGHYC1 |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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