Correlation Between Neste Oil and NoHo Partners
Can any of the company-specific risk be diversified away by investing in both Neste Oil and NoHo Partners 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 Oil and NoHo Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neste Oil Oyj and NoHo Partners Oyj, you can compare the effects of market volatilities on Neste Oil and NoHo Partners 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 Oil with a short position of NoHo Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neste Oil and NoHo Partners.
Diversification Opportunities for Neste Oil and NoHo Partners
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Neste and NoHo is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Neste Oil Oyj and NoHo Partners Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NoHo Partners Oyj and Neste Oil 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 Oil Oyj are associated (or correlated) with NoHo Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NoHo Partners Oyj has no effect on the direction of Neste Oil i.e., Neste Oil and NoHo Partners go up and down completely randomly.
Pair Corralation between Neste Oil and NoHo Partners
Assuming the 90 days trading horizon Neste Oil Oyj is expected to under-perform the NoHo Partners. In addition to that, Neste Oil is 2.2 times more volatile than NoHo Partners Oyj. It trades about -0.05 of its total potential returns per unit of risk. NoHo Partners Oyj is currently generating about -0.03 per unit of volatility. If you would invest 721.00 in NoHo Partners Oyj on August 26, 2024 and sell it today you would lose (7.00) from holding NoHo Partners Oyj or give up 0.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neste Oil Oyj vs. NoHo Partners Oyj
Performance |
| Timeline |
| Neste Oil Oyj |
| NoHo Partners Oyj |
Neste Oil and NoHo Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neste Oil and NoHo Partners
The main advantage of trading using opposite Neste Oil and NoHo Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neste Oil position performs unexpectedly, NoHo Partners 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 NoHo Partners will offset losses from the drop in NoHo Partners' long position.| Neste Oil vs. Fortum Oyj | Neste Oil vs. Sampo Oyj A | Neste Oil vs. Nordea Bank Abp | Neste Oil vs. UPM Kymmene Oyj |
| NoHo Partners vs. Kamux Suomi Oy | NoHo Partners vs. Harvia Oyj | NoHo Partners vs. Qt Group Oyj | NoHo Partners vs. Revenio Group |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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