Correlation Between NESTE OYJ and Polski Koncern
Can any of the company-specific risk be diversified away by investing in both NESTE OYJ and Polski Koncern 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 Polski Koncern 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 Polski Koncern Naftowy, you can compare the effects of market volatilities on NESTE OYJ and Polski Koncern 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 Polski Koncern. Check out your portfolio center. Please also check ongoing floating volatility patterns of NESTE OYJ and Polski Koncern.
Diversification Opportunities for NESTE OYJ and Polski Koncern
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NESTE and Polski is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding NESTE OYJ UNSPADR and Polski Koncern Naftowy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polski Koncern Naftowy 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 Polski Koncern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polski Koncern Naftowy has no effect on the direction of NESTE OYJ i.e., NESTE OYJ and Polski Koncern go up and down completely randomly.
Pair Corralation between NESTE OYJ and Polski Koncern
Assuming the 90 days trading horizon NESTE OYJ UNSPADR is expected to under-perform the Polski Koncern. In addition to that, NESTE OYJ is 1.24 times more volatile than Polski Koncern Naftowy. It trades about -0.24 of its total potential returns per unit of risk. Polski Koncern Naftowy is currently generating about -0.1 per unit of volatility. If you would invest 1,230 in Polski Koncern Naftowy on September 23, 2024 and sell it today you would lose (117.00) from holding Polski Koncern Naftowy or give up 9.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NESTE OYJ UNSPADR vs. Polski Koncern Naftowy
Performance |
| Timeline |
| NESTE OYJ UNSPADR |
| Polski Koncern Naftowy |
NESTE OYJ and Polski Koncern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NESTE OYJ and Polski Koncern
The main advantage of trading using opposite NESTE OYJ and Polski Koncern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NESTE OYJ position performs unexpectedly, Polski Koncern 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 Polski Koncern will offset losses from the drop in Polski Koncern's long position.| NESTE OYJ vs. Reliance Industries Limited | NESTE OYJ vs. Marathon Petroleum Corp | NESTE OYJ vs. Valero Energy | NESTE OYJ vs. Neste Oyj |
| Polski Koncern vs. Reliance Industries Limited | Polski Koncern vs. Marathon Petroleum Corp | Polski Koncern vs. Valero Energy | Polski Koncern vs. Neste Oyj |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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