Correlation Between NESTE OYJ and BANGCHAK P
Can any of the company-specific risk be diversified away by investing in both NESTE OYJ and BANGCHAK P 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 NESTE OYJ and BANGCHAK P into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NESTE OYJ UNSPADR and BANGCHAK P FGN , you can compare the effects of market volatilities on NESTE OYJ and BANGCHAK P 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 NESTE OYJ with a short position of BANGCHAK P. Check out your portfolio center. Please also check ongoing floating volatility patterns of NESTE OYJ and BANGCHAK P.
Diversification Opportunities for NESTE OYJ and BANGCHAK P
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NESTE and BANGCHAK is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding NESTE OYJ UNSPADR and BANGCHAK P FGN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANGCHAK P FGN and NESTE 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 NESTE OYJ UNSPADR are associated (or correlated) with BANGCHAK P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANGCHAK P FGN has no effect on the direction of NESTE OYJ i.e., NESTE OYJ and BANGCHAK P go up and down completely randomly.
Pair Corralation between NESTE OYJ and BANGCHAK P
Assuming the 90 days trading horizon NESTE OYJ UNSPADR is expected to under-perform the BANGCHAK P. But the stock apears to be less risky and, when comparing its historical volatility, NESTE OYJ UNSPADR is 1.45 times less risky than BANGCHAK P. The stock trades about -0.34 of its potential returns per unit of risk. The BANGCHAK P FGN is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 87.00 in BANGCHAK P FGN on September 21, 2024 and sell it today you would lose (8.00) from holding BANGCHAK P FGN or give up 9.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
NESTE OYJ UNSPADR vs. BANGCHAK P FGN
Performance |
| Timeline |
| NESTE OYJ UNSPADR |
| BANGCHAK P FGN |
NESTE OYJ and BANGCHAK P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NESTE OYJ and BANGCHAK P
The main advantage of trading using opposite NESTE OYJ and BANGCHAK P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NESTE OYJ position performs unexpectedly, BANGCHAK P 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 BANGCHAK P will offset losses from the drop in BANGCHAK P's long position.| NESTE OYJ vs. STORE ELECTRONIC | NESTE OYJ vs. Gol Intelligent Airlines | NESTE OYJ vs. Benchmark Electronics | NESTE OYJ vs. AOI Electronics Co |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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