Correlation Between Neste Oil and SSH Communications
Can any of the company-specific risk be diversified away by investing in both Neste Oil and SSH Communications 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 SSH Communications 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 SSH Communications Security, you can compare the effects of market volatilities on Neste Oil and SSH Communications 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 SSH Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neste Oil and SSH Communications.
Diversification Opportunities for Neste Oil and SSH Communications
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Neste and SSH is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Neste Oil Oyj and SSH Communications Security in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSH Communications 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 SSH Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSH Communications has no effect on the direction of Neste Oil i.e., Neste Oil and SSH Communications go up and down completely randomly.
Pair Corralation between Neste Oil and SSH Communications
Assuming the 90 days trading horizon Neste Oil Oyj is expected to generate 0.66 times more return on investment than SSH Communications. However, Neste Oil Oyj is 1.51 times less risky than SSH Communications. It trades about -0.04 of its potential returns per unit of risk. SSH Communications Security is currently generating about -0.07 per unit of risk. If you would invest 1,469 in Neste Oil Oyj on August 31, 2024 and sell it today you would lose (45.00) from holding Neste Oil Oyj or give up 3.06% 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. SSH Communications Security
Performance |
| Timeline |
| Neste Oil Oyj |
| SSH Communications |
Neste Oil and SSH Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neste Oil and SSH Communications
The main advantage of trading using opposite Neste Oil and SSH Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neste Oil position performs unexpectedly, SSH Communications 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 SSH Communications will offset losses from the drop in SSH Communications' 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 |
| SSH Communications vs. Tecnotree Oyj | SSH Communications vs. Qt Group Oyj | SSH Communications vs. Bittium Oyj | SSH Communications vs. Harvia 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |